Duplex + ADU should be considered as Triplex?

[J Grant]

A lot of the reason that market participants want to call it an ADU and a lot of the reason that appraiser go along with that is..... they don't want to either pay the higher fee for a multifamily appraisal or they don't want to learn how to do a multi-family appraisal. No matter how much spin you put on it... an SFR with an ADU is a two dwelling property. A duplex with an ADU is a three unit property.

omg - an appraiser does not go along with it because they don't want to learn to do a multi-family appraisal! fee from the client is its own discussion- while what you say is true some of the time regarding a dwelling or duplex plus ADU can be 2 or 3 units, it is not true a many times -- because of zoning. HBU is legally permissible and the SFR zoning that allows an ADU will often not allow two units. If the zoning allowed 2 units, people would build out larger second units instead of a typically smaller ADU. Some communities do not even allow renting the ADU.

As far as a duplex with an ADU, that could be a zoning issue as well ( or not ) - the appraiser has to research it.

 

[CGinMN]

If you conclude ADU, I would communicate it to the client before delivering the report. Fannie does not accept duplex with ADU, although I think Freddie does.

 

[Shawangunk RE]

A lot of the reason that market participants want to call it an ADU and a lot of the reason that appraiser go along with that is..... they don't want to either pay the higher fee for a multifamily appraisal or they don't want to learn how to do a multi-family appraisal. No matter how much spin you put on it... an SFR with an ADU is a two dwelling property. A duplex with an ADU is a three unit property.

100%.

 

[sputnam]

omg - an appraiser does not go along with it because they don't want to learn to do a multi-family appraisal! fee from the client is its own discussion- while what you say is true some of the time regarding a dwelling or duplex plus ADU can be 2 or 3 units, it is not true a many times -- because of zoning. HBU is legally permissible and the SFR zoning that allows an ADU will often not allow two units. If the zoning allowed 2 units, people would build out larger second units instead of a typically smaller ADU. Some communities do not even allow renting the ADU.

As far as a duplex with an ADU, that could be a zoning issue as well ( or not ) - the appraiser has to research it.

I do reviews everyday. I talk to appraisers everyday. I can assure you that plenty of appraisers do no know how to do an appraisal of a 2-4 family dwelling. You might pay a little closer attention before you jump... I did not say ALL appraisers and I also DID NOT say that incompetence was the only reason.

 

[J Grant]

I do reviews everyday. I talk to appraisers everyday. I can assure you that plenty of appraisers do no know how to do an appraisal of a 2-4 family dwelling. You might pay a little closer attention before you jump... I did not say ALL appraisers and I also DID NOT say that incompetence was the only reason.

I also did hundreds of reviews at one time- IMO it is a ludicrous assumption that appraisers classify an ADU because they do not know how to appraise a 2-4 dwelling - and this is a duplex anyway so they are already doing a 1-4 unit report, the only question is what is the third unit - an ADU or an additional third unit- that is determined by zoning . We can not HBU something not legally permissible.

The HBU is it legal is the problem - the issue I see in many of these posts is not being able to properly classify the property, or contorting things to fit a loan type, or hit a value, etc. Which I suppose is a form of incompetence - but not limited to 1-4 dwellings by any means. We all might need help from time to time, but most of the clueless posts here show muddled thinking or an agenda to hit a value or get a loan approved. I fault this as the low fee AMC Darwinian selection of the survivors being low fee/fast turn time getting the bulk of work and you get what you pay for - the argument that fee does not affect quality was BS from day one - sure, in a few cases that is true, but continued underpayment and draconian short turn times result in what we see -the majority of the clueless posts here from appraisers floundering around reference they are doing an AMC order

 

[sputnam]

Grant... I see incompetence in appraisals of 2-4 family dwellings regularly. You can believe that all certified residential appraisers know how to appraise small multi-family properties if you want to... but, the work I see doesn't support that. Of course, AMCs offer low fees. AMCs don't exist for the well being of appraisers. They are businesses. Lower costs is one way to increase profit. The blame for accepting a fee that is too low... or for accepting work we aren't competent to do... is on us.... the appraisers. Saying 'NO' is pretty simple. Saying 'Sure but, it's going to cost $zzz' isn't that hard either.

 

[J Grant]

Grant... I see incompetence in appraisals of 2-4 family dwellings regularly. You can believe that all certified residential appraisers know how to appraise small multi-family properties if you want to... but, the work I see doesn't support that. Of course, AMCs offer low fees. AMCs don't exist for the well being of appraisers. They are businesses. Lower costs is one way to increase profit. The blame for accepting a fee that is too low... or for accepting work we aren't competent to do... is on us.... the appraisers. Saying 'NO' is pretty simple. Saying 'Sure but, it's going to cost $zzz' isn't that hard either.

I will not dispute that you see lous 2-4 family appraisals. But that is different than making a blanket statement that appraisers avoid classifying an ADU as a third unit to avoid doing a 1-4 dwelling

The folks posing these kinds of questions tend to be utterly confused in general;/and /or so desperate to hit a value or please a client they start distorting things and look for overly complex ways to solve a simple problem.

I know why AMCs offer low fees, their profit, etc.I am saying that it is coming home to roost: this deplorable system of fee splitting of the borrower-paid fee leaving little $ for the appraiser. Low fees as a selector clearly are not working well since the posts here indicate that—and these are the people who bother asking a question. Imagine what else is going on out there.

We've heard this for years, blaming the appraisers, that saying NO is simple - it will not solve things; only abolishing the fee split and restoring full fees C and R as first intended will solve it. Since up, look at the reality, saying NO is economic suicide for the appraisers stuck in the grim AMC bid/low fee gets an order .. I am beyond sick of those who work on the review or management affiliation with an AMC always blaming the appraiser. While they bear some fault, the individual appraisers are up against a powerful industry and are just low-resource people trying to survive. it is shameful not to address teh real problem which is the profiteer system that allows this to go on.

 

[Tom D]

this gets to be so slick with the owner. if they can rent it out then they did it this way to avoid zoning, but so as to collect rent. now if you count is as rent, then this is a 3 unit. if you count it as an adu on a 2 family, maybe it's an over improvement. you just count it as part of unit 1. lucky you got one similar comp, it might save you soul in that's what sell go for. forget the income then.
but, however you choose, make sure you really explain your thinking in your reconciliation part.
adu is usually built for a very specific reason, that not being to rent it out. unless they are being too slick. it is not a cost effective addition to your value. you never see them on new construction. so i say it's an over improvement with way too much thought on well, how does it really contribute. it's the damn 2 kitchen existential threat. run rabbit run.

 

[Mark K]

A duplex with an ADU is a three unit property.

Absolutely. It will be rented out as a 3-unit income producing property.

** Can someone answer Fourplex + ADU = Commercial or still Residential ? **

Thank you

its a 5-unit residential property.

 

[J Grant]

this gets to be so slick with the owner. if they can rent it out then they did it this way to avoid zoning, but so as to collect rent. now if you count is as rent, then this is a 3 unit. if you count it as an adu on a 2 family, maybe it's an over improvement. you just count it as part of unit 1. lucky you got one similar comp, it might save you soul in that's what sell go for. forget the income then.
but, however you choose, make sure you really explain your thinking in your reconciliation part.
adu is usually built for a very specific reason, that not being to rent it out. unless they are being too slick. it is not a cost effective addition to your value. you never see them on new construction. so i say it's an over improvement with way too much thought on well, how does it really contribute. it's the damn 2 kitchen existential threat. run rabbit run.

We are not responsible if later an owner rents an ADU out . How does a slick owner who might rent it out turn an ADU into a 3 unit in our appraisal when the zoning still only allows a duplex plus an ADU, or a SFR with an ADU.?

In some communities they have rules about it, in others, they are free to rent it out. The ADU remains an ADU whether it is rented or not.