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Can a large Detached Site Condo Dwelling with a Tear Down ADU be appraised as an SFR?


Thread Starter
Sophomore Member
Oct 24, 2013
Professional Status
Appraiser Trainee
The family of a 100-acre agricultural zoned land has recently subdivided the property into ten separate site condo lots (all at 10 acres each.) after their father has passed over a few years ago. Ag zoning allows 1 dwelling per 10 acre lot.

All of the children are well off with their other family-owned estate properties and none of them live on this particula site, except for their parents and their loyal and faithful groundskeeper.

Of the 10 site condo parcels, only one parcel included 2 dwellings (subject property), which is being sold to the groundskeeper. The groundskeeper was allowed to live in a small section of the big house while working on repairing the ADU where he had resided for the past 25 years.

Subject is a 5 bedroom and 5 bath 5,100 sf mansion in average condition with a detached 2 bedroom and 1 bath 800 sf maid's quarter in tear-down (C6) condition that has already been gutted and is under repair which has no market contributory value in my opinion due to the extent of repairs needed (from termite eaten flooring to interior walls and roof covering and 90-year-old kitchen and bath all need to be completely replaced). There are 2 electric meters on site. Current zoning allows 1 dwelling with 1 accessory dwelling unit.

Subject is considered one of a kind as there have been no similar large parcels of Ag zoned land sold within the entire city during the past 10 years, except for a recent project parcel that was just sold within the past 6 months.

The lender had ordered an SRIP Form 1025 appraisal for this site condo with ADU purchase transaction between the Landlord/Seller and 25 year long term tenants who had worked as hired hand and grounds care keeper. Value is not an issue as it is about 30% below the market based on recent project sale of a similar-sized 10-acre vacant land.

i had reported the property's condition after the inspection and informed the Lender the ADU has no contributory value due to its existing C5/C6 condition and will proceed with the appraisal report on the SRIP Form 1025. The Lender responded affirmatively.

The report took over a week to prepare due to lack of similar comps with only 1 similar comp within the project during the past 6 months and all other comps were from competing neighborhoods from adjacent cities.

The Lender's Reviewer had no issue with the appraisal except for the requirements:
1) The appraisal can not be valued as an SFR and must be prepared on SRIP Form 1025 because the property has 2 separate utility meters.
2) Provide a cost to cure estimate on the teardown ADU to make it C4 condition.

Naturally, i politely objected with:
1) Does the property "have to be" appraised as a 2-unit small income residential property based simply on the fact that there are 2 utility meters on site when there is no contributory value from the ADU?
2. How can a small 800 sf cottage in tear-down condition that has already been gutted (no interior walls except for framing, no floor covering, no ceiling, a leaky roof that all need to be replaced) be "fixed or repaired" to C4 condition when everything that needs to be repaired or replaced will have to be new?

So the bottom line is, is there any way an Underwriter can work this loan by treating the property as an SFR with no ADU value in ist existing condition without repairing or restoring the small ADU cottage?

J Grant

Elite Member
Dec 9, 2003
Professional Status
Certified Residential Appraiser
your client is an idiot, it is not a 1025 income property, explain why

glenn walker

Elite Member
Oct 11, 2006
Professional Status
Certified Residential Appraiser
No its not two units-its one big house with a tear down -ADU - Ask the Reviewer when is the last time He has ever-seen A 2 to 4 unit small income site condo? Then tell him to get you 5 or 6 good comps ! The Underwriter is probably pulling her hair out because this is DOA and her brilliant Reviewer ( NOT ) decided to pretend the property is a small income property. If I was the reviewer, I would have walked this over to the Underwriter and said NOPE the appraiser is correct. We just have a property that currently does not meet Guidelines. Then I would have given her two options. 1-Have the owners either remodel the so called ADU or bring in a Cat-D-10 Bulldozer and tear that Bad-Boy down . As far as a cost to cure that is not going to help the Underwriter because Her and the Reviewer are trying to pound a square peg into a round hole, after all management says they need a minimum of 200 loans a month to be funded or the ship goes down.

TO REVIEWER: I am sorry to inform you that I am respectfully disagreeing with you . We have a 5,000 sq. Ft. home with a old second small house that is rated a C-5 to C-6 and near the end of its physical life. I did not provide a cost to cure because, it may require a floor to roof remodel and that would require a licensed contractor to physically inspect the property and give an-itemized list providing a total dollar amount to bring the property into a habitable condition. When that estimate is complete, please forward me a copy and I will attach it as Exhibit "B" in my report. I will be out of town for Super Bowl so that should give you adequate time to search for those Non-Existent- 2 -Unit Small Income Site Condos.
Last edited:

Terrel L. Shields

Elite Member
Gold Supporting Member
May 2, 2002
Professional Status
Certified General Appraiser
Tell them to provide a contractors estimate of repairs. You cannot do it.


Elite Member
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
Here is one glaring issue;

The family of a 100-acre agricultural zoned land has recently subdivided the property into ten separate site condo lots
Ag zoning allows 1 dwelling per 10 acre lot.
Of the 10 site condo parcels, only one parcel included 2 dwellings (subject property),
So in the approval of the condo subdivision, was the ADU not included as a "dwelling", or was it included as a storage shed, not being livable?

So if the lot for the subject is 10 acres, and the ADU is not grandfathered, passed the approval of a condo subdivision date,
then as a 2 unit property,
it is not a legal conforming use,
and you would have to check with the zoning office, if, they would even allow it to be brought up to "livable" condition, and be occupied.

From here, it looks like a legal nightmare and the underwriter won't get what they want.

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