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Appraising 2 homes on one parcel for FHA
- Thread starter jumpoutadplane
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jumpoutadplane
Freshman Member
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- Sep 2, 2009
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- Florida
Let's start over
I am appraising two houses on one parcel - 9.8 acres. One of the houses is currently vacant and for rent. The other is owner-occupied. This is FHA and I cannot decide which form to use. I am leaning more towards a multi-family. It is Zoned RR (rural residential), and I am awaiting a response from zoning on grandfathered use/rebuilding, etc. What form would you use? Thanks for your assistance.
I am appraising two houses on one parcel - 9.8 acres. One of the houses is currently vacant and for rent. The other is owner-occupied. This is FHA and I cannot decide which form to use. I am leaning more towards a multi-family. It is Zoned RR (rural residential), and I am awaiting a response from zoning on grandfathered use/rebuilding, etc. What form would you use? Thanks for your assistance.
Mr Rex
Elite Member
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- Jan 12, 2004
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- Certified Residential Appraiser
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- North Carolina
1. Can you please provide a definition of Accessory Dwelling Unit?
An accessory dwelling unit (ADU) is defined as a habitable living unit added to, created within, or detached from a primary single family dwelling and contained on one lot. ADU’s are commonly understood to be a separate additional living unit, including kitchen, sleeping, and
bathroom facilities. ADU’s are subordinate in size, location and appearance to the primary home and may or may not have separate means of ingress or egress. An attached unit contained within a single family home, also known as a "mother-in-law apartment," or a “garage apartment” that may or may not be attached to the primary residence are the most common types of accessory dwelling unit. An accessory dwelling unit sometimes involves the renovation of a garage, basement or a small addition to a primary residence. The determination of whether or not an ADU is a second dwelling unit is to be made by the appraiser and indicated in the site analysis section of the report where zoning, highest and best use, and legal use are addressed. The fact that an ADU is rented or generates income should not categorically result in a determination that the property contains two dwelling units.
2. If the Accessory Dwelling Unit is on a separate electric meter does it then become a 2-
unit property?
An accessory dwelling unit may or may not have separate electrical service. The appraiser will make the determination of whether or not an ADU is a second dwelling unit utilizing the criteria stated above in question number one. FHA does not take the position that an appraiser should conclude the presence of two electric meters necessarily constitute a two dwelling unit structure and not an ADU.
An accessory dwelling unit (ADU) is defined as a habitable living unit added to, created within, or detached from a primary single family dwelling and contained on one lot. ADU’s are commonly understood to be a separate additional living unit, including kitchen, sleeping, and
bathroom facilities. ADU’s are subordinate in size, location and appearance to the primary home and may or may not have separate means of ingress or egress. An attached unit contained within a single family home, also known as a "mother-in-law apartment," or a “garage apartment” that may or may not be attached to the primary residence are the most common types of accessory dwelling unit. An accessory dwelling unit sometimes involves the renovation of a garage, basement or a small addition to a primary residence. The determination of whether or not an ADU is a second dwelling unit is to be made by the appraiser and indicated in the site analysis section of the report where zoning, highest and best use, and legal use are addressed. The fact that an ADU is rented or generates income should not categorically result in a determination that the property contains two dwelling units.
2. If the Accessory Dwelling Unit is on a separate electric meter does it then become a 2-
unit property?
An accessory dwelling unit may or may not have separate electrical service. The appraiser will make the determination of whether or not an ADU is a second dwelling unit utilizing the criteria stated above in question number one. FHA does not take the position that an appraiser should conclude the presence of two electric meters necessarily constitute a two dwelling unit structure and not an ADU.
CANative
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- Retired Appraiser
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- California
You're still asking the wrong question. First you figure out how to appraise it. Then you do the appraisal. Then you decide how to report the appraisal.
Sounds like a residential property which would appeal to an owner-occupant with an additional dwelling unit to be used for whatever purpose the owenr sees fit.
Use the 1004 and check ADU. The 1004 can be used for one or two unit properties so it doesn't really matter. The 2-4 form is geard for small residential income properties. This does not sound like the subect.
Read the valuation protocol (appendix D) and the 4150.2 for guideance.
Sounds like a residential property which would appeal to an owner-occupant with an additional dwelling unit to be used for whatever purpose the owenr sees fit.
Use the 1004 and check ADU. The 1004 can be used for one or two unit properties so it doesn't really matter. The 2-4 form is geard for small residential income properties. This does not sound like the subect.
Read the valuation protocol (appendix D) and the 4150.2 for guideance.
Webbed Feet
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Pending getting the details regarding the allowed uses in the zoning..... the form question is still premature....
Sigh......................
http://209.190.242.26/html/USPAP2008/USPAP_folder/uspap_foreword/sow_problem_.htm
http://209.190.242.26/html/USPAP2008/USPAP_folder/uspap_foreword/COMPETENCY_RULE.htm
http://209.190.242.26/html/USPAP2008/FAQ/faq_61_.htm
http://209.190.242.26/html/USPAP2008/USPAP_folder/standards/Standards_Rule_1_2.htm
http://209.190.242.26/html/USPAP2008/USPAP_folder/standards/Standards_Rule_1_3.htm
{WARNING!!!!!!!! In doing this my virus checker has informed me that Standards Rule 1-6 at the ASB web site is infected with “Trojan-Downloader.js.IFrame.arl” … It may be my virus checker... but look out. Perhaps the ASB web site is infected}
http://209.190.242.26/html/USPAP2008/AOs/ao_23_.htm
http://209.190.242.26/html/USPAP2008/AOs/ao_28_.htm
http://209.190.242.26/html/USPAP2008/AOs/ao_29_.htm
http://209.190.242.26/html/USPAP2008/FAQ/faq_189_.htm
Terrel L. Shields
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- Professional Status
- Certified General Appraiser
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- Arkansas
A - is the property a SFR or a Duplex? Sounds to me like it is two houses on one property. I think your first stop needs to be the "book"....the FHA 4150.2 book. Read it. Will the lender even accept the property? It might depend upon what program that they are in. I think I would ask the lender first. I have a feeling that this isn't something they would lend on but I don't know.
Any 2 - 4 property is submitted on the appropriate form, and that is not a URAR... An accesssory unit is not a seperate dwelling except in the most secondary way.
Couch Potato
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- North Carolina
No, you are appraising a property improved by two houses.
Which form to use is really a question of which form gives the clearest picture of the property you are appraising. The more similar the two houses, the more likely the multi-family form is the best form; the more dissimilar the two houses, the more likely the single-family form is the best form.
The comps should be properties improved by two houses, duplexes, or houses with secondary living quarters depending on what is available and what most closely matches the subject.
How difficult of an assignment it is depends on the recent sales in the area. If you have 6 just like it, it is an easy assignment.
hastalavista
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- California
It really is this simple.
Why would an investor pay a 450 multiple when then can get the same income for a 90 multiple? (Answer: No sane investor would.)
Terrel L. Shields
Elite Member
- Joined
- May 2, 2002
- Professional Status
- Certified General Appraiser
- State
- Arkansas
A GRM on 10 ac. would be skewed due to land ...and its implied much lower cap rate than a wasting asset like a house...
Back to the issue. I would use the form that FHA wants me to. Call 'em. Once you have decided that it is a "2 family" residence or a SFR with accessory unit..then you can decide what form is the correct FHA form to use. And you will have to use 2 family comps (non-duplex 2 family imho) otherwise this is going to be one ugly assignment.
If you don't check with the DIU or someone, you run the risk of being placed on "the list" by FHA.
Back to the issue. I would use the form that FHA wants me to. Call 'em. Once you have decided that it is a "2 family" residence or a SFR with accessory unit..then you can decide what form is the correct FHA form to use. And you will have to use 2 family comps (non-duplex 2 family imho) otherwise this is going to be one ugly assignment.
If you don't check with the DIU or someone, you run the risk of being placed on "the list" by FHA.
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