Garage is currently being converted to an ADU

[CA123]

Mechanic liens.

understood

 

[Terrel L. Shields]

yes, they have cost estimates, timing to construct is 2 months, and permits in place, yes it's allowed use. visually it's maybe 10-20% complete, rough electrical, trenches dug for plumbing, electrical, sewer, etc

Appraise as ADU and deduct the cost to cure. Perhaps there is a further discount "as is" but where in the world would you get that estimate except PFA.

why would that impact the appraisal?

The lender needs informed. Period. They can make the decision to go on. As secondary market will balk at partial construction.

Mechanic liens.

Exactly. More than one bank has discovered a lien or unpaid bill post-loan that slid in front of the first mortgage.

I know because I had a lien on a guy's condo and home once and the bank financing the condo didn't realize it. Offered me $1,000 to swap places... I said no. Eventually the bank paid me off. The guy went under and moved to Denver and became a jewelry maker. Died a few years ago. I really liked him but he refused to take my calls to work something out and bingo he woke up with judgments against him.

 

[Mike Ault]

Now that I see the photo, it looks more like a covered storage area with a moat.

 

[CA123]

What physical characteristic would preclude that "garage" from being employed as a storage building? Apparently, the borrowers think having a garage is superfluous regardless. Seemingly, that house will never have a "garage" in the future.

i uploaded the garage photo for your review, I think it's misleading to call it storage

 

[glenn walker]

Owners bought the home in 2022 with a nice large 22' x 30' 2 car garage in the backyard. I just appraised the home and the garage is in process of being converted into an ADU. footings are dug, driveway has been partially removed for plumbing, sewer, electrical, etc. My question is would you give the garage any value at its current state (under construction, cant park in it) My gut says "no value" but I'd like to ask the community.

thank you,
CA123

A ADU that size in CALI if they get permits is worth more than a garage-But minimum value would be a garage -

 

[Fernando]

View attachment 72673
here's the garage in question, there's substantial work being done to the garage and the surrounding area

I thought the conversion was almost complete needing interior improvements.
Seeing above, I can't imagine a lender will do a loan.
I never understood why the loan agent and lender allow an appraiser to go when they know a normal Fannie Mae loan is not possible. Waste of my time.

 

[Mike Ault]

i uploaded the garage photo for your review, I think it's misleading to call it storage

That is a tough one. Of course, you know the answer. If you're looking to do an as-is value, you find comps that sold with similar unfinished projects. To just declare that it has "no value" could also be construed as misleading.

 

[Zephyr999]

Begin with the end in mind... @Terrel L. Shields ...has it right.

Consider deduct a percentage estimate of finish to derive an estimate of As-Is.

 

[VicTheApraisr]

Owners bought the home in 2022 with a nice large 22' x 30' 2 car garage in the backyard. I just appraised the home and the garage is in process of being converted into an ADU. footings are dug, driveway has been partially removed for plumbing, sewer, electrical, etc. My question is would you give the garage any value at its current state (under construction, cant park in it) My gut says "no value" but I'd like to ask the community.

thank you,
CA123

Our jobs as residential RE appraisers is to reflect the typical home buyer. Our first reference is to look at the local market. Assuming ADU-garage conversions aren't commonplace in this market: When most people buy a house, they want to park their car in a garage. The highest and best use is as a garage. Legal or not, pretty or ugly, the conversion is considered functional obsolescence. Figure out the cost to cure (convert it back to a garage), and make adjustments across your comps and cost approach if necessary.

Summary: No value for ADU, subtract the cost to cure. I would estimate 5-7 thousand dollars but results may vary depending on local market.

 

[shrubberyvaluation]

Owners bought the home in 2022 with a nice large 22' x 30' 2 car garage in the backyard. I just appraised the home and the garage is in process of being converted into an ADU. footings are dug, driveway has been partially removed for plumbing, sewer, electrical, etc. My question is would you give the garage any value at its current state (under construction, cant park in it) My gut says "no value" but I'd like to ask the community.

thank you,
CA123

I don't give value to anything, I check the market.