Guest house and no comparables

[Darrel Clark]

Original home built in 1914, somewhat updated, 2,528 sq ft. It is a two story with no basement. Also on the same legal description is a guest house, built 1949. It has 753 sq ft with two bedrooms and one bath. There are no comparable sales with guest houses. How do you come up with a value for the guest house? I have some ideas, but I would welcome any ideas from any of you.

The appraisal report is to determine a value to settle an estate, not for financing.

 

[KYLECODY]

You can go back in time and see if you have any sales with a guest house and then use comparables that sold near that time and try and extract some adjustments.

Or take the subject itself from the last time it sold and use comparables from that time period. See how much contributory value the market gives the subjects guest house versus sales with or without guest homes.

 

[Kevin A. Spellman]

You have to respect the zoning by laws. Do other properties within its competing market possess the characteristics or rights to build guest-quarters?

The area I service requires a five year residency prior to qualifying and a maximum of 800 sf for one town and 900 sf for another town. The sewerage disposal system may create a factor. Would a property have to forfeit sleeping quarters in the main house for the guest house?

Is your market a year round market or is it a resort market with seasonal rentals including personal property. Is there a conversion market from garages to living area for guest quarters?

Here in MA we have state codes for properties. 101 is a single family and the code 109 is a property with two living units on one parcel. These codes are hosted on record cards in the Assessor’s office.

 

[Metamorphic]

You should also consider if the accessory dwelling is suitable for use as a rental. That could provide an alternate means of valuing the accessory.

We have some of them around here....not enough for a strong market but not so few as that you never see them. We usually value them for about what their GLA/bed-bath count is worth; a little less than that if that extra GLA makes the total GLA of the house and accessory superadequate for the neighborhood, a little more if our assessment of the whole package suggests it would have value as a rental, or the whole layout is so well done (privacy accessibility, livability of the unit etc) that it would be very advantageous for a buyer to rent, move their aged parents into, move grown kids into, etc.

 

[Mike Boyd]

2 bedrooms is oversized for the typical guest house. I would bet it is or has been used as a rental. If it is legal, I would consider doing it on a 1025 (2-4 family) form. Check with the planning department if there are any restrictions on renting a unit that was originally permitted as a guest house.

 

[Darrel Clark]

I like Metamorphic's idea of how he implied to develope a GRM and use that to value the guest house. It is actually being used as a rental and is legal non-conforming use (grandfathered). Yet it is not really a duplex. For the purpose of this report, I believe treating it as a single family with a guest house will be best. Thanks for all of your responses.