Finished Basement an ADU?

[ProspectMI]

I completed an order a few months ago on a home that has a finished walk-out basement which includes a kitchen, bath, bedroom, and a living room type area. The basement is accessible from both inside and outside of the home and it is common in this market place to have finished basements similar to this. The client/investor of this order has given me push back from the get go and now they have come back months later to have me consider this basement an ADU. In my opinion, this is not an ADU as every home similar to this would also be considered an ADU.

I looked up Fannie Mae's definition and it appears to broad and general that it leaves so much room for interpretation and left me confused. This is the first time in my 10 years appraising that I have had a client want me to consider a finished walk-out basement, an ADU, and although it would be easy in this instance to just oblige and help, I also want to make sure I'm doing this the correct way.

Has anyone had this issue come up and what have you done?

Also, in 10 years appraising, I have only dealt with 3 properties with an ADU, all of which had a detached ADU on the same parcel.

 

[Jerry Bone Jr]

I took the ADU class from Richard Hagar, who would suggest the ADU question is answered by a H&BU analysis. Additionally, Richard would ask about an "expectation of privacy".

 

[bart nathan]

Below grade = basement. Possibly you could puss back based on window height?

 

[Terrel L. Shields]

We do not have many hillside 2 story homes with walk out basement. But of those, I would say 1 in 4 have a second kitchenette in the lower level. Seen it time and again. But it is NOT an ADU. I would reply that it was not designed as an ADU, it is not used as an ADU, and it is common for such basement kitchens in the market (as you stated). I would not budge.
It might be a kitchette like this, or a full kitchen - I've seen both. They function the same way - a downstairs snack or light cooking area. I don't recall ever seeing one occupied as an ADU.

 

[TruJa]

I'm working on one similar today... It "could" be converted to an ADU, but per city building codes it is too big to legally be an ADU. However, after bracketing it with 2 similar unpermitted properties it looks like the market is going to value it similar to an ADU.

 

[Artemis Fowl]

This is the first time in my 10 years appraising that I have had a client want me to consider a finished walk-out basement, an ADU, and although it would be easy in this instance to just oblige and help, I also want to make sure I'm doing this the correct way.

Your answer is right here. Go with your instincts...a finished walk-out basement is what you perceive and appears likely what a typical buyer would also.

I had some nutter the other month trying to convince me his bi-level was a 2story...even to the point of bribery. I shut him down pretty hard at that point but was admittedly curious how much value he placed on integrity.

 

[chad hampton]

I would say like most things in real estate, It is how your local market perceives it. In my market finished basements with kitchens/kitchenettes are very common. They are not accessory dwelling units. In my market ADUs are almost always detached.

 

[Terrel L. Shields]

but was admittedly curious how much value he placed on integrity.

None.

In my market they are almost always detached.

It is hard for me to view a home with simply two kitchens as an ADU unless it is separated by a lockable door and obviously used as a separate living space. I have a neighbor who built a 300 SF or so room with bed, kitchenette and bathroom for his mother in law when he built his house. From his kitchen you went down a short hall to this suite and they could access the house or there was a door to the outside. But his MIL could live her life separately. Otherwise, I basically only see a small separate dwelling or a room over the garage with both internal and external access.

I actually appraised a home once, where the lady had died but when the house was built 40 years before, she had a screened in porch with a wood cook stove - a very ornate and large wood stove. She liked to can using the old fashion kitchen set up of her youth. Her pantry was just inside the house and she probably had hundreds of jars of jam, jelly and canned veggies. Outside a few Amish or old order Mennonites, I doubt you'd find 3 women in the USA that could and did can such an amount of food.

 

[Tim Hicks (Texas)]

Why not a two family property then?

 

[Artemis Fowl]

None.

Effectively yeah...I wondered how much he would've thought was an enticing number tho.

I confess I might have a price...bidding begins with at least 12 zeros so not likely to be something I ever have to worry too much about. In the unlikely event it happened...I would still feel really guilty about it whilst commuting on my private spaceship to my moonbase vacation home.

Oh...the new face is the late great Leo Fender. I actually have the same model magnifying hat/glasses/thingy I wear when soldering electronical stuff.