Has anyone appraised a property with a casita?

[lcaappraisal]

I recently appraised a property with a casita (seperate living area from the main house with bedroom/office and full bathroom). The builder is Darling Homes and they include this casita into their GLA. However; according to ANSI it should not be included. I submitted the appraisal deducting the casita from the GLA of the subject and the comps, but the lender and borrower disagree. I know that when these things go to listing in MLS agents will represent the casita as living area and if an appraiser isn't aware...from the front it looks like one unit and thus will eventually become a future problem. Has anyone else had this experience or have any input on the matter?:Eyecrazy:

In addition the main house is only 2 bedrooms.

 

[Michigan CG]

Welcome to the Forum ICA. The Ask an Appraiser section os for the general public to ask questions to appraisers and all replies require a moderators approval.

I have moved your post to the General area.

 

[PropertyEconomics]

LCA ... welcome to the forum.
If the casita is a separate living unit, ie not joined structurally with the main unit, you are absolutely correct in your handleing of this situation. That being said, however, how does your market treat the casita? I note that you said you deducted the casita area from your subject and your comparables. Do your comparables have casitas that are also included in their living area? I am just curious.

 

[Apex Mike]

We have alot of Casita's in my area. Forget what ANSI says....your appraising the market's reaction to the subject and its various components. If it is built with the same or better quality as main GLA, is permitted and the market recognizes it as GLA, then you should give it full GLA value. There is no one size fits all in real estate and appraising, various "guidelines" try to do that to us. Just make sure you have at least one comp with a casita and fully disclose your method. Even stranger.....I started my career in Utah. The Park City, Utah market recognizes basements as GLA. The agents reported it all as GLA since it was always built with the same quality. Therefore, appraisers included all levels of the home as GLA. Just explain, explain, explain like everything else in appraising. You can never go wrong with too much explaination.

 

[incognito]

ANSI is a standard, and lacking any other reference or data, I would adhere to it. Having said that, I will consider Living area to be what the local market perceives it to be (presuming it is a legal use). I happen to live in a neighborhood of Key West style homes, most of which have drive a through Porta Cochere (fancy word for drive through carport) which leads to the garage. On one side of the carport is the house, and on the other is a guest house. It is effectively like a motel room in size and set-up, and can serve as a guest house, office, or kids play room. Regardless, the local market considers it to contribute more per sq.ft. to overall value than normal living area, (and it costs a whole hell of a lot more per sq.ft. to build as well.) The county property appraiser considers it living area, but when I appraise such a property I segregate it from main house living area and adjust separately.

Having said that, You must first see how the market responds to such an area. In some areas buyers may be willing to pay more (per sq.ft.) for such an improvement compared to typical living area $/sq.ft. adjustments, (and in some areas they may be willing to pay less), and a line item adjustment may then be indicated, separate from living area adjustments.

So I would say, include it in overall living area if you see your market accepts it's contribution is value per sq.ft. comparable to normal living area, and don't if your market sees it as being more valuable (or less) than normal living area, AND explain why in the report...

 

[PropertyEconomics]

Before you follow Apex's advice .. you must answer one question that is very important .. is ANSI a standard for Texas? IF so you must follow ANSI standards .. if not the ANSI is voluntary and neither required by your state law or by USPAP. It could, however, be a supplemental standard of your lender, in which case you would also have to comply with it under USPAP requirements. This would be a requirement as part of your scope of work.

With regard to Incognito's post ... ANSI is most probably a voluntary standard and not one that is mandatory. You do not have to adhere to it, unless the above conditions apply. As for me, I adhere to the standard but do not say so in my report.

 

[Apex Mike]

Before you follow Apex's advice .. you must answer one question that is very important .. is ANSI a standard for Texas? IF so you must follow ANSI standards .. if not the ANSI is voluntary and neither required by your state law or by USPAP. It could, however, be a supplemental standard of your lender, in which case you would also have to comply with it under USPAP requirements. This would be a requirement as part of your scope of work.

Yes, I should have included that in my message. Thanks for the addition, very true advice!

 

[Michigan CG]

We have alot of Casita's in my area. Forget what ANSI says....

Consistency breeds competency. ANSI is a nationally accepted standard and you have the ability to consistently defend your report if you use it.

..........your appraising the market's reaction to the subject and its various components. If it is built with the same or better quality as main GLA, is permitted and the market recognizes it as GLA, then you should give it full GLA value............

By all means, but not in the GLA area. Give it a separate line and then as you said.......

.........Just explain, explain, explain like everything else in appraising.

We have alot of Casita's in my area..........

But does your whole state have these unique features? What I am saying is, I would give it full GLA value, but not include it in GLA because maybe some on your state board would/could have an issue with you including it when a nationally recognized standard disagrees with you.

 

[PropertyEconomics]

But does your whole state have these unique features? What I am saying is, I would give it full GLA value, but not include it in GLA because maybe some on your state board would/could have an issue with you including it when a nationally recognized standard disagrees with you.

As I noted, ANSI may be nationally recognized, but it is not mandatory and would not be the test against the appraisal, UNLESS, the appraiser said they measured to ANSI standards and then missed something or calculated something wrong.
As I said I consider the standard but do not state so in my report. That covers me with the Board .. HOWEVER .. your market should absolutely dictate how the area is treated. Your market will not necessarily accept or follow ANSI .. and you must follow what your market says.

 

[Apex Mike]

As I noted, ANSI may be nationally recognized, but it is not mandatory and would not be the test against the appraisal, UNLESS, the appraiser said they measured to ANSI standards and then missed something or calculated something wrong.
As I said I consider the standard but do not state so in my report. That covers me with the Board .. HOWEVER .. your market should absolutely dictate how the area is treated. Your market will not necessarily accept or follow ANSI .. and you must follow what your market says.

I absolutely agree!!! I dont state it in my report, my state does not require it and I dont have clients that do. I am not afraid to defend myself to a state board on something that I have clearly disclosed, explained and is justified reasonably. If your market is telling you something different than a "guideline" and you over-value or under-value a property, I dont think a state board or a lawyer is going to give a damn about ANSI.