Can Enclosed Garage be counted Living Area

[Mike Kennedy]

Larry - HBU includes "legally permissible".

 

[Joyce Potts]

Joyce,

What the county or RE agents do has nothing to do with what we do. The most important thing to remember is to not perform a misleading report. Call it like it is. If it is a garage conversion, call it a garage conversion. If it is a garage apartment, call it that. If it is so typical, they you should have comparable sales with similar improvements and it is not a problem. Garage conversions do take away garage parking and this should be considered. Many times the functional utility of garage conversions is ridiculous. How often do you have to go through a laundry room to get to a bedroom in a typical home? The level of quality should also be considered.

The most important thing to remember is don't do something just because everybody else seems to do it. Do what is correct. We are not here to make pretty reports. Separate these type improvements out and find like kind comparable sales. If there aren't any, then make market based adjustments.

Tim,

Where in my post did I suggest to do something because everyone else does it? The original post asked what was correct and my answer was there is not always a correct answer. The answer may vary given the circumstances. Some garage conversions are common in some areas, while in others, they're not. And of course you'd seek out like comparables--how else to you draw the conclusion if the conversion GLA is market acceptable?

Furthermore, go back and re-read my last sentence in post #4. EXPLAIN IT THOROUGHLY. Did you think I said that in the hopes of providing a misleading report, as you suggest?

 

[Zero]

That's the right answer... both for value and for GLA determination. Everything else is wrong.

So I guess whether or not it's above grade, whether or not it's finished similar to the rest of the house, suitable for year round use, zoning, HBU and other issues don't matter? Really? I can just make it up as I go along as long as the market says it's ok. I've said it before and I'll say it again, this is a dangerous (and ridiculous) stand to take.

 

[Colorado Guy]

Great advice here - only one thing I would add - take pics and disclose, disclose, disclose. If you included in GLA - state why. If you did not include in GLA, again state why.

 

[Steve Owen]

Legal vs Not.

If the market makes no determination(doesn't care) if the garage converted 12 years ago had a permit pulled, and is willing to pay X amount for it based on your market research, why would we not assign a value to it. Seems to me like it wouldn't matter permit or not.

Even if the rest of this was true (and it isn't) the possibility exists that the government could come in and make you remove an illegal, unpermitted addition. Therefore, in the context of an appraisal done for the secondary mortgage market, due dilligence would require the appraiser to determine legality.

 

[Joyce Potts]

So I guess whether or not it's above grade, whether or not it's finished similar to the rest of the house, suitable for year round use, zoning, HBU and other issues don't matter? Really? I can just make it up as I go along as long as the market says it's ok. I've said it before and I'll say it again, this is a dangerous (and ridiculous) stand to take.

Andrew,

I think you're deviating from the intent of the original post. My assumption as to whether or not the garage conversion is inlcuded in the GLA based on the market ASSUMES it was not below grade (not a basement) or unfinished any less than the remainder of the house.

I thought that was a given--then we discuss if it's included in the GLA. Again, there are some markets where garage/carport conversions are very common and others where it isn't.

In fact, the property appraiser's offices here in Central Florida will often include such a conversion in their GLA if and when a permit is pulled or it's obvious upon a re-evaluation.

I still say there is no right or wrong answer. To determine the answer things like above or below grade, quality of the finishes and duct work for CHA are all good criteria at arriving at the answer.

 

[Wendy]

In fact, the property appraiser's offices here in Central Florida will often include such a conversion in their GLA if and when a permit is pulled or it's obvious upon a re-evaluation.

I'm backing her up on this and will add that it often gets added as living space regardless of permit. In my area, if you've got ductwork and finish, you're getting taxed. Permitted or not.

 

[Zero]

Andrew,

I think you're deviating from the intent of the original post. My assumption as to whether or not the garage conversion is inlcuded in the GLA based on the market ASSUMES it was not below grade (not a basement) or unfinished any less than the remainder of the house.

I thought that was a given--then we discuss if it's included in the GLA. Again, there are some markets where garage/carport conversions are very common and others where it isn't.

In fact, the property appraiser's offices here in Central Florida will often include such a conversion in their GLA if and when a permit is pulled or it's obvious upon a re-evaluation.

I still say there is no right or wrong answer. To determine the answer things like above or below grade, quality of the finishes and duct work for CHA are all good criteria at arriving at the answer.

I never read that there were any "givens". Some garages are (at least partially) underground. Either way, I still agree with Mike G. Define it according to a standard and you have a common point of departure. Compare and adjust according to market data. To give every appraiser license to go out and make up definitions/ standards of measurement and reporting as they go along, using only "the market" as a source is a dangerous (and ridiculous) notion. It just seems counterproductive for everybody to be acting/writing their own glossaries, standards and methods when there are plenty out there to guide us. Today it's GLA, tomorrow it's something else. If the relativist madness continues we'll soon have to read a two page definition of every line on the form just to have any clue what the appraiser is doing or how things are defined.

There are EXTREME cases where it might be warranted, a few related by others here on the forum (Barry Dayton has had at least a doozie), but this work-a-day stuff is pretty elementary. Why re-invent the wheel everytime we have something a little bit different?

 

[Joyce Potts]

Andrew,

Not sure what you're we're discussing. My perception is we're in agreement.

I said it should be taken on a case by base basis. There is no right or wrong answer for every situation. What did you think I said?

 

[sunnycal]

Isn't Geographical competency a form or relativism? The fact is different markets have different traditions and laws. California passed a law having to do with affordable housing so that accessory units could be used due to the lack of affordable housing. The problem is they left enforcement up to each city. Los Angeles allows an unpermitted unit but Culver City will require it be torn down if they try to sell the property.

The fact, is that the market does determine value. However, out here in CA we almost always do not include it in living space but show it separately on the sketch and add value separately in the market analysis. If an addition or unit is illegal we mark it as illegal on the appraisal report and say that the highest and best use would be the legally permitted use. However, if sales data shows that people are willing to pay extra for the accessory unit then we give it value. This is especially common for extra rental income from USC students. If the property is a 4 unit building with an extra unit then I report it as 5 units and reject the property. That does give me some satisfaction though! Borrowers try to tell me that they "they don't have the keys" or that "frosted glass window isn't a bathroom, it's a storage area" (as a student happens to come walking out).