ADU is accessible by elevator only (is it an ADU?)

[Terrel L. Shields]

They don't have elevators in India...

 

[J Grant]

The 3rd floor unit is considered an Accessory Unit (even w/ a cooktop). Since the 3rd level can only be accessed through an exterior entrance the living space for the 3rd floor should not be included in the GLA, rather it should be on a separate line of the grid.

Please remove from GLA and provide a comp w/ AU. Use an aged comp if no current sales are available.

Please advise whether AU is legal or not. If illegal. please comment and confirm if the existence of the illegal AU will not jeopardize any future hazard insurance claim that might need to be filed for the subject property.

Rereading my narrative on the report, I see where a reader could have been confused about the layout (I did clearly say the elevator provided interior access to all 3 levels, but did have another mention about how all 3 levels have their own exterior entries). This could be just a simple misunderstanding, I guess I will find out if they push back again.

All you need to do to correct this is let the lender/client know that the 3rd floor IS accessed internally to the rest of the main dwelling by the elevator.

 

[cstu11]

In California, an ADU requires a separate entrance. Since the house shares the elevator, it's not a separate entrance.

 

[John Hassler]

Appraising in Florida and came across a 3 story beach home. The entire first floor is the garage, 2nd floor is 2 bed 2 bath with a full kitchen and living area, and the 3rd floor consists of 1 bed 1 bath with a large kitchenette (full-size cabinets and fridge with stove top, but no oven) and living area. All the floors can be accessed from the exterior. There is an interior elevator that goes to all 3 floors, but only an interior staircase that goes from the 1st floor to the 2nd floor. So the only way to get from the 2nd floor to the 3rd floor from the interior would be by elevator. So my question is, is the 3rd floor absolutely an ADU? It is accessible by elevator, but elevators do break and are not very practical. Currently, it is being used a multi-generation home. Could you make an argument that the 3rd floor is a part of the main home (is accessible through the interior by elevator) and should be included in the GLA and make the subject a 3 bed 3 bath home? First time coming across this situation, thanks in advance for reading and any insight you may have.

Looks like a classic H&BU issue. You've indicated that both units have external access so the elevator is just secondary access.

Assuming both one and two units structures are legal, which has more market value:
1) A 3-3 SFR less the cost to cure (remove the second kitchen and any other needed changes);
2) A 2-2 home with a 1-1 accessory/generational unit, or:
2) A two-unit building with a cost to cure the elevator access by adding keyed floor access; one key with 1st and 2nd floor access and another with 1st and 3rd.

Run calculations on all three property types and see which has the highest return after factoring in cost to cure.

 

[J Grant]

Looks like a classic H&BU issue. You've indicated that both units have external access so the elevator is just secondary access.

Assuming both one and two units structures are legal, which has more market value:
1) A 3-3 SFR less the cost to cure (remove the second kitchen and any other needed changes);
2) A 2-2 home with a 1-1 accessory/generational unit, or:
2) A two-unit building with a cost to cure the elevator access by adding keyed floor access; one key with 1st and 2nd floor access and another with 1st and 3rd.

Run calculations on all three property types and see which has the highest return after factoring in cost to cure.

This post is a mixture of convoluted thinking and incorrect understanding of HBU for residential properties ( and perhaps in general ) But esp for res properties wrt lending-

HBU analyzes the land as vacant and the contribution of the improvements and asks is the existing use the HBU or is another use the HBU ( other use is when the land as vacant is worth more than any contribution of the improvement and that also could be because of a different use for the property such as commercial vs residential )

In the above, one assumes the three-story beach house contributes more to the value than demolishing it to get a vacant lot would - regardless of whether the top floor is called an ADU or not. Got it ? We appraisers don't get to re-design houses move kitchens around or take them out according to what gets more value in the market !!! I mean, then why not add a pool or remodel while you are at it, that brings more value too ( sarcasm ) There are times when a lender instructs to remove a second kitchen or stove , but that is about lender criteria for a loan, not an appraiser making a HBU decision and telling the owner to take the kitchen out. Ditto for the absurd idea about the cost to cure an elevator with a keyed floor access.

The primary access is the interior elevator and the secondary access is the exterior access - because the 3rd floor exterior a person has to go outside and climb up 3 flights in all kinds of weather.

 

[John Hassler]

This post is a mixture of convoluted thinking and incorrect understanding of HBU for residential properties ( and perhaps in general ) But esp for res properties wrt lending-

HBU analyzes the land as vacant and the contribution of the improvements and asks is the existing use the HBU or is another use the HBU ( other use is when the land as vacant is worth more than any contribution of the improvement and that also could be because of a different use for the property such as commercial vs residential )

In the above, one assumes the three-story beach house contributes more to the value than demolishing it to get a vacant lot would - regardless of whether the top floor is called an ADU or not. Got it ? We appraisers don't get to re-design houses move kitchens around or take them out according to what gets more value in the market !!! I mean, then why not add a pool or remodel while you are at it, that brings more value too ( sarcasm ) There are times when a lender instructs to remove a second kitchen or stove , but that is about lender criteria for a loan, not an appraiser making a HBU decision and telling the owner to take the kitchen out. Ditto for the absurd idea about the cost to cure an elevator with a keyed floor access.

The primary access is the interior elevator and the secondary access is the exterior access - because the 3rd floor exterior a person has to go outside and climb up 3 flights in all kinds of weather.

The driving force in H&BU is looking at a property from the eyes of a subject's likely potential uyer. Would the buyer for the OP's assignment look at the property as a large SF dwelling, an average size SF dwelling with an ADU, or an a two-unit income play? Based on the OP's comments that the neighborhood is a beach area, all three may be potential options. Additionally, the modification costs, if any, look to be nominal.
If the OP's area is all large SF dwellings then the H&BU is typically done subconsciously by the appraiser in a nanosecond. Likewise if the area is all income producing units. But in those situations where it isn't clear, the best way is to informally work the valuation problem out under each scenario. Where it gets complicated is when more than one use equates to the same/similar best value.

Oh, and for the record, if the building is three stories tall there are only two flights of stairs to get to the third floor, not exactly unusual for a rental unit.

 

[J Grant]

The driving force in H&BU is looking at a property from the eyes of a subject's likely potential buyer. Would the buyer for the OP's assignment look at the property as a large SF dwelling, an average size SF dwelling with an ADU, or an a two-unit income play? Based on the OP's comments that the neighborhood is a beach area, all three may be potential options. Additionally, the modification costs, if any, look to be nominal.
If the OP's area is all large SF dwellings then the H&BU is typically done subconsciously by the appraiser in a nanosecond. Likewise if the area is all income producing units. But in those situations where it isn't clear, the best way is to informally work the valuation problem out under each scenario. Where it gets complicated is when more than one use equates to the same/similar best value.

Oh, and for the record, if the building is three stories tall there are only two flights of stairs to get to the third floor, not exactly unusual for a rental unit.

According to The Appraisal Institute the highest and best use of a property is defined as: "The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value."

The HBU definition is not what you wrote: , The driving force in H&BU is looking at a property from the eyes of a subject's likely potential buyer. Would the buyer for the OP's assignment look at the property as a large SF dwelling, an average-size SF dwelling with an ADU, or an a two-unit income play

HBU is the analysis of land as vacant what is the optimum use for the land ( which is legal ) and do the existing improvements add value to the land or is the HBU to demolish the improvement and sell the land as vacant?

The existing use fo this property is residential. Whether the market gives it more value as an ADU with dwelling or as a SFR is not the appraisal question for an AS IS appraisal If the assignment is to appraise the property AS IS, we don't start re-labeling or physically rearranging existing properties to get more value out of them. We determine what exists and then appraise it as exists.

The OP was asking if the existing structure a 3-story beach house with third-floor access from the interior by elevator, (with an additional secondary ext access by outside stairs ) is a SFR or is a 2 story dwelling with a third story ADU. The answer is because the top, 3rd story is accessible from the interior it is not an ADU, because one of the essential elements of an ADU is it is NOT accessible from the interior to the rest of the dwelling.

 

[John Hassler]

According to The Appraisal Institute the highest and best use of a property is defined as: "The reasonably probable and legal use of ... an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value."

Thank you for the definition and proving my point. Correct me if I misunderstood you but per your comments improved properties would never change use until the land value exceeded the current use. I don't find that to be the case. Properties convert their use as the economics dictate even when the before and after uses exceed the underlying land value.

 

[Dublin ohio]

The answer is because the top, 3rd story is accessible from the interior it is not an ADU, because one of the essential elements of an ADU is it is NOT accessible from the interior to the rest of the dwelling.

If you are speaking of Fannie definition. You may want to change your opinion (see bottom paragraph of second section). The kicker is "expectation of privacy". If the elevator opens up into living area on the second floor. I would say no expectation of privacy

"The ADU may, but is not required to, include access to the primary dwelling. However, it is not considered an ADU if it can only be accessed through the primary dwelling or the area is open to the primary dwelling with no expectation of privacy."

What is required for accessory dwelling units (ADUs)?

selling-guide.fanniemae.com

 

[J Grant]

Thank you for the definition and proving my point. Correct me if I misunderstood you but per your comments improved properties would never change use until the land value exceeded the current use. I don't find that to be the case. Properties convert their use as the economics dictate even when the before and after uses exceed the underlying land value.

You are all over the place on this now. HBU analyzes land use as vacant and does the improvement as exists still contributes more to the land than tearing the improvement would. That is a strange word convert, but an alternate use if legal for HBU then exists can be a judgment call, but in that case it would be an alternate use such as commercial.

Whether or not somebody wants to change the physical characteristics of a property staying at its existing HBU ( residential) such as enlarging it, make it into an ADU, removing an ADU, add a pool etc) is not a HBU question. tIt is a different step in the valuation process. Of course, properties can change when people make changes to them.