Did I make a huge mistake? Accessory unit?

[smackodu]

http://www.appraisalinstitute.org/a...-using-income-approach-the-appraisal-journal/

This and $2 will get you a cup of coffee. The OP's method of determining value based primarily on the sales comparison approach is completely flawed and cannot be supported by anything!

 

[mark hurlock]

This and $2 will get you a cup of coffee. The OP's method of determining value based primarily on the sales comparison approach is completely flawed and cannot be supported by anything!

TJS made assumptions that others disagree with, evidenced by the article from The Appraisal Institute.

You are also entitled to your opinion.

 

[smackodu]

TJS made assumptions that others disagree with, evidenced by the article from The Appraisal Institute.

You are also entitled to your opinion.

The OP added the GLA of AU to the GLA of the dwelling unit to get a GLA that he then used to compare to other recent sales. EVERYTHING ABOUT THAT IS COMPETELY WRONG! His opinion of value cannot be supported.

 

[mark hurlock]

The OP added the GLA of AU to the GLA of the dwelling unit to get a GLA that he then used to compare to other recent sales. EVERYTHING ABOUT THAT IS COMPETELY WRONG! His opinion of value cannot be supported.

Your opinion of the op's method has nothing to do with my reply to TJS.

Also, I am not so quick to judge the op without particular knowledge of the report and the market.


I once appraised a similar situation, not for financing but for listing purposes. Had I made your misguided assumptions, my client might have lost money. The property sold very close to my value opinion which included an illegal detached unit. I had no sales with similar detached units.

Again, you are entitled to your opinion.

 

[TJSum]

TJS made assumptions that others disagree with, evidenced by the article from The Appraisal Institute.

You are also entitled to your opinion.

Er, I guess you missed the part about your link that it refers to legal ADUs.

"“Understanding and Appraising Properties with Accessory Dwelling Units,” by Martin John Brown and Taylor Watkins, examines how to value properties with permitted ADUs "

 

[TJSum]

TJS made assumptions that others disagree with, evidenced by the article from The Appraisal Institute.

You are also entitled to your opinion.

You also totally ignored what TS posted, it seems to me my "assumptions" are not assumptions at all.

"A one- or two-unit property that includes an
illegal additional unit or accessory apartment
(sometimes referred to as a mother-in-law,
mother-daughter, or granny unit).
Yes, provided that:
• The illegal use conforms to the subject
neighborhood and to the market
• The property is appraised based upon its
current use.
• The borrower qualifies for the mortgage
without considering any rental income from
the illegal unit.
• The appraisal must report that the
improvements represent an illegal use.
• The appraisal report must demonstrate
that the improvements are typical for the
market through an analysis of at least three
comparable properties that have the same
illegal use.
• The lender ensures that the existence of the
illegal additional unit will not jeopardize
any future hazard insurance claim that might
need to be filed for the property.

 

[mark hurlock]

Er, I guess you missed the part about your link that it refers to legal ADUs.

"“Understanding and Appraising Properties with Accessory Dwelling Units,” by Martin John Brown and Taylor Watkins, examines how to value properties with permitted ADUs "

Nowhere in this thread did I read tharax describe the unit to be illegal. That part I am pretty sure of.

So yes, you and others have made assumptions that I am unwilling to make at this time.


JMO.

 

[mark hurlock]

You also totally ignored what TS posted, it seems to me my "assumptions" are not assumptions at all.

.

Exactly how did you determine the subject unit is illegal from this thread?

 

[TJSum]

Exactly how did you determine the subject unit is illegal from this thread?

Let me first say that Denis provided excellent advice regarding this matter.

It is my understanding this is not a conversion of any type but a separate detached structure which is a second living unit. Yes, sometimes illegal uses do have market value, but this has to be demonstrated by market evidence. Per the OP, there are no comps or market data to show the market does in fact value detached second living units. So those who are saying it could still have market value, it does not meet that standard either because there is no market evidence and it certainly does not conform to the market.

From my experience in Maryland, the only way to be sure if it is legal or not is to contact the county and let them make that determination on any particular property. Zoning regulations are general in nature, and exceptions are made and can be seen in the market. Also, even if the zoning allows something, it does not mean a property followed the proper procedures to make it legal (permits, etc.).

When faced with a situation like this, I always shoot the client an email first to obtain permission to contact the county regarding any particular property, in case there is any blow back from the HO if the county is alerted to any potential illegal uses.

I am not assuming it is illegal, but my advice was this is the first thing the OP needs to find out. Hence my advice to contact the county. I am assuming the OP did not research this yet because they did not state if it was illegal or legal which is a vital factor. If it does not show on tax records as the OP stated, most likely it is illegal, but only the county can confirm its status.

 

[mark hurlock]

I am not assuming it is illegal, but my advice was this is the first thing the OP needs to find out. Hence my advice to contact the county. I am assuming the OP did not research this yet because they did not state if it was illegal or legal which is a vital factor. If it does not show on tax records as the OP stated, most likely it is illegal, but only the county can confirm its status.

Tharax posted the following,


“3 of my comps had in-law suites, however 2 were attached and the other was a basement, none detached like mine. I described the unit as being detached with separate HVAC. The comps included the in law in the GLA (with the exclusion of the basement suite), but now I know that was because it was attached. “


Then TJS posted the following,



“Per the OP, there are no comps or market data to show the market does in fact value detached second living units. So those who are saying it could still have market value, it does not meet that standard either because there is no market evidence and it certainly does not conform to the market.”




Why would market value be exclusively determined by it being detached? You lost me.

Are you saying I can only compare detached units with other detached units?

I would disagree if those are the only available sales and the report properly explained the reasoning.

I also offered additional reasoning for value from income potential.

As far as illegality should have been address, we are in complete agreement. And that is excellent advice. I don't know what tharax did and make no assumption.

I further make no assumptions that the comps were or were not legal as well.

We are both trying to be helpful to tharax, but I'm not willing to hang him before learning ALL the facts.