• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Help w' 2055 interior- Rental space over garage

Status
Not open for further replies.

Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
I have an assignment with a typical house that has an atypical Detached garage which has finished appartment over garage. It has around 900 SF over the garage and there is a Kithchen/2 bedrooms and bath, and central heat and air.

I have told the bank this is atypical. They have asked me basically to ignore this space, as it is a low loan to value, and consider it storage. My question to you is this. The 2055 is by definition a limited appraisal. I don't do just a whole lot of 2055's. Can I ignore the space over garage, since I am departing anyway? What should I do? Help. Thanks!
 

Tony Lehn

Junior Member
Joined
Oct 28, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
William,

It sounds to me like you have yourself a duplex, and a possible zoning violation. Some would tell you to consider it an in laws quarters, to get around the duplex label, but if it is above the garage, and has a staircase, that might be a stretch. Did you ask if there is a lease on the space, or if they were renting it to anyone?

Also, the form doesn't affect your research, only the presentation of the research. The final conclusions should be the same.

Hope that helps.
 

Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
I'm sorry it is a detached garage. I will edit the above. I'm pretty sure it is a legal nonconforming use.
 

Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
It is not leased but my understanding it is about to be. Sorry I didn't mention that above.
 

Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
Pamela, I'll state them. But do you see any reason why I can't depart and say it is there but I'm not giving it value. The 2055 is a departure anyway.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
William,

OK... (I was hoping to sneak out the door without answering you in detail)

Departure is not using an approach to value that would normally be used for and condsidered viable for that specific property. The form doesn't really have anything to do with it except the 2055 does state somewhere that it is a "Limited" appraisal. That basically means that you are using the sales comparison approach only and are departing by not using the cost approach (most typically).

In your case, there would be an additional departure by not using the Income Approach on what appears to be an income producing property. This would constitute a 'double' departure, IMO. If you were to use the 1004 or a narrative, complete the cost approach and the sales comparison approach but not complete the income approach on this one, it is a departure and a limited appraisal.

#1: Do not ignore the apartment over the garage. Do ask for the rental agreement or lease and find out as much as you can about it. This does make a difference!

#2: If you choose to complete this on the 2055, make sure you disclose what you did, why you did it, and what effect those departures might have on the appraisal and the report.

Not including the apartment makes this appraisal and report completed as a Hypothetical Condition. Lots of explaining!

Yuck.
 

wyecoyote

Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
William,

Just state what is there and value appropriately. As for calling it what it is check with your local governing authority (zoning/building/planning). See if there is alowable of an accessory dwelling unit. In several cities where I appraise these are allowable even to be rented, provided that they are 1/2 the size of the main house. We do get several of these selling once in awhile. I would not departe like Pamela stated departure is for an approach to value not departure on an improvement of the subject.

Ryan
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
No, no, no!!!! Lie like a trooper. Become party to the fraud. All in the name of pleasing the client.

What you have is an income producing property. The lender wants you to do the property as a single family residential so they can sell the loan.

Everything will be fine UNTIL something goes wrong and then guess who is going to appear before the board, possibly lose his license, pay a big fine, and be required to take additional continuing education classes.

But hey, why not? Just think of those lenders who will love you...of course they probably won't be in the business by then and if ask will sell you out in a heart beat.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Like Pam eluded to, it may be more work to "ignore" it than reporting what you see. We have many of those garage/apt things in my area. Although most are not rented, except to maybe family members, they're usually guest suites or home offices. If it's a single family home in a residential area, the highest and best use is still owner occupied residence. So if it's just a detached garage with a suite above, it gets a little value, but not as much as it probably cost them for the interior finishes. For a 2055, I'd note the rent data in the report, compare it to other homes with similar guest cottages or garage apartment suites, and move on to the next file. It's the LO's problem if their lender won't take a loan because the HO decided to rent the gar/apt. They need to find the appropriate loan.
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks