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Coach House + SFH.... ADU or 2nd unit?

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Amy Perkins

Senior Member
Joined
Jul 20, 2003
Professional Status
Certified Residential Appraiser
State
Tennessee
Funny, they call shopping carts "buggies" in Tennessee...lol
 

Steven Spychalski

Thread Starter
Junior Member
Joined
Jan 14, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
So sounds like it might not be legal... I wonder if you were real nice the assessor could give you some information. They stay open around here and can be a good resource. Also, another idea is check on which one is worth more if you are on the fence. Good luck and sleep on it cause it seems to help me figure out a situation better.
Thx! Given the age... it has to be grandfathered. But I can't know for sure unless I get a Zoning Cert and that requires a FOIA filing. This is a tricky one because the HBU is really close for a smaller 2 unit property or a small SFH in this market. Its an appreciating area with an active rental market. Within 1 block there is a 2 flat with similar unit mix and GBA (albeit with only 1 building) and a SFH similar utility, size and finish, that closed for about the same.

I think there is more sales data for the subject as a 2 unit, which is how I am leaning, but all involved parties are adamant I am wrong.... so I ask the AF experts!
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Given the above, I advised the client of the situation and recommended the assignment should be for a 2 unit property. Client is adamant the subject "be viewed as a SFH with an ADU" (Maybe cuz they were unaware of the 2nd building?)
why is it not an ADU? Fannie Mae does not care what you call it. What does the city call it? If legal, then it is an ADU. If violates zoning, well there are some extra steps like having 3 comps with similar zoning issues, etc. It's all in the guide.

Whether a property is defined as a one-unit property with an accessory unit or a two-unit property will be based on the characteristics of the property,​
which may include, but are not limited to, the existence of separate utilities, a unique postal address, and whether the unit is rented....​
The appraisal report demonstrates that the improvements are typical for the market through an analysis of at least one​
comparable property with the same use....The borrower qualifies for the mortgage without considering any rental income from the accessory unit....​
Much the same for FHA
An Accessory Dwelling Unit (ADU) refers to a habitable living unit added to, created within, or detached from a primary one-unit Single Family dwellingAn ADU is usually subordinate in size, location and appearance to the primary Dwelling Unit and may or may not have separately metered utilities or separate means of ingress or egress...The Appraiser may consider a Manufactured Home to be an ADU if it meets the highest and best use and FHA requirements.​
 

Steven Spychalski

Thread Starter
Junior Member
Joined
Jan 14, 2003
Professional Status
Certified Residential Appraiser
State
Illinois
why is it not an ADU? Fannie Mae does not care what you call it. What does the city call it? If legal, then it is an ADU. If violates zoning, well there are some extra steps like having 3 comps with similar zoning issues, etc. It's all in the guide.

Whether a property is defined as a one-unit property with an accessory unit or a two-unit property will be based on the characteristics of the property,​
which may include, but are not limited to, the existence of separate utilities, a unique postal address, and whether the unit is rented....​
The appraisal report demonstrates that the improvements are typical for the market through an analysis of at least one​
comparable property with the same use....The borrower qualifies for the mortgage without considering any rental income from the accessory unit....​
Much the same for FHA
An Accessory Dwelling Unit (ADU) refers to a habitable living unit added to, created within, or detached from a primary one-unit Single Family dwellingAn ADU is usually subordinate in size, location and appearance to the primary Dwelling Unit and may or may not have separately metered utilities or separate means of ingress or egress...The Appraiser may consider a Manufactured Home to be an ADU if it meets the highest and best use and FHA requirements.​
Hi Terrel: I agree... but you nailed it: Separate utilities, address, and rented. I have zero similar sales to show it is typical of the market... City calls it nothing; the 2nd structure is not even on the assessor's record (blt in 1866). Appraisers cannot order zoning certs... only ownership can.

So, are you saying that I can still call it and value it as an ADU (if the HBU is similar/same) even though it is rented, separate utilities, postal address and have no other ADU comps? I'm not trying to die on this hill, but I want to be sure I am handing it correctly. :)

I'm searching for SFHs with Attic or basement ADUs but not finding any just yet. If I find one or two, then I can see my way to declaring it an ADU. But I think I need to have at least 1 similar sale. Right?
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
The way I read it, you can so. So is the ADU older than the zoning laws? Permits? If no permits, you need 3 comps. If permitted or otherwise grandfathered, then 1 comp with an ADU. .. And as I read it, it is your call via HBU to say it is 2 houses or 1 with ADU. The URAR allows for 1 house plus an ADU, easy way unless zero homes around with an ADU. We find them here somewhat frequently, but maybe you don't...or perhaps the issue it is hard to ID a property with an ADU But I would search for key words in the MLS... Granny, in-law, accessory, second, ADU, etc. to ID homes sold with an ADU. Estimate the contributory valueof the ADU, apply to your subject ADU. As 2 houses, "duplex"...I see problems with that but some might say easier to use duplex sales - where I am a duplex is almost always a single building with a dividing wall and usually are mirror images of each other (not always.)
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
The couple that I have done were done as a 2 unit property. They were much further West than your property (Portage Park area).
What I did was find a coach house sale or pending anywhere on the North Side and demonstrate (in the workfile) how similar it comps to a like sized traditional 2 unit.

IMO, the typical buyer is looking to rent the coach house out and live in front. Similar tot he typical 2 unit buyer.

Wish I could help more.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
HBU is to determine the most likely buyer type. This can be based on the market and the characteristics of the main residence vs. the second residence. If an investor who purchases the property for passive income form both units is the mostly likely buyer you have a small residence income property. If the most likely buyer wants the house and thinks the ADU is just keen because grammy and gramps can live there and be "watched' then you've got an SFR + ADU.

Two unit zoning would seem to indicate that the use is permissible (property rights.) Actual permits is a different issue.
 
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