In Law Suite

[Guardian115]

I have an assignment to do an appraisal on a pre-existing residential home, with plans and specs to add a detached in law suite/home. Of course there are no similar sales with such an addition. Hence striking out on the paired sales technique. Any better ways to derive a good adjustment or should I add the additional square footage to the main living area, to compare to larger homes? Any other concerns I should address? Whoever replies..Thank you!

 

[Kevin A. Spellman]

Here in MA your assignment would fail to be identified as an in-law suite. It would be a guest house or a satellite room, but not an in-law. In MA we define an in-law with interior access between each living unit. Speak with the authorities within the municipality of your subject and ask how to define an in-law. Here in MA it is quite common for the building/zoning department to require a recording of a covenant stating the property cannot become a two family and can only be occupied by a direct blood relative.

 

[c w d]

Find other properties that have sold with inlaw suites. Compare those properties to similar properties in their respective market areas. Then derive a contributory (or lack thereof) ratio. It's basically two appraisals in one: Analysis of inlaw suites vs none in different a market area(s) to determine the ratio. Then the appraisal for your subject and its market area with the applied ratio adjustment to the comparables. The argument is that the ratio for the inlaw suite vs no inlaw suite more or less reflects market reaction to such a contributory structure regardless of the market area. Unless there is availability of better data. Obviously, if there is better data available then you would want to use it instead.

Or you could look for historical sales in your subject's market area and then adjust for market conditions (time adjustments). If you can't find any then the above approach may work for you.

Just be sure you're not analyzing areas where inlaw suites are all the rage since this may provide you a ratio skewed by better acceptance and desirability which in effect will inflate the ratio.

Yeah, it's not pretty but then we don't always have perfect data to work with. In these cases it's all about sound, logical methodology. Just make sure your reader can understand the process.

If this is an AMC job decline it immediately. No way would I do this for an AMC for the pittance they pay. Tell them the subject is your brother's wife's daughter's cousin's mother's uncle's nephew's house and you have a vested interest in the property.

 

[Mztk1]

Expand your search. I don't know where in Florida you are, but in the counties we cover (Pinellas, Manatee, Polk, Pasco, Hillsborough, Orange, Seminole) it seems you can always find a SFR with ADU. They are quite common.

I would never include a detached building in the living area of the entire property. If there are none detached, I might use a house with an attached inlaw suite and keep that suite separate from the living area for comparison.

With MLXchange looking for houses with in-law suites and rental units is easy. You might have to resort to listings, pendings or dated sales. I'd have to think that in this economy the last house a person would want to sell is one that has a separate unit for a relative who can help with the mortgage.

 

[VolcanoLvr]

I will echo Jim...but a bit stronger: absolutely DO NOT include the DETACHED structure with the GLA of the subject. You've described a separate building.

If a conventional loan on the F/F form: 1004 & check the ADU box. It's probably also 'subject to completion' for the ADU only. Be sure to properly describe the situation.

Do what the others have said by extending your search in distance & time, including neighboring cities/towns if necessary.

Make sure local zoning allows this add'l structure.

 

[Richard Carlsen]

This sounds like it has turned into a Complex appraisal. It also sounds like you do not have sufficient professional experience in this type of property to do this assignment. I would stop immediately and either notify the client that you are seeking assistance from a fully qualified appraisers (remember to document your lack of qualification and what you and the client have agreed upon to overcome this deficiency in the final report) or, lacking the desire to do that, decline the assignment. Continuing on without notification to the client can lead to some real problems down the road.

 

[Metamorphic]

Didn't you say its just "plans and specs" for a 2nd dwelling, not an actual standing second dwelling? Are you appraising it with a Hypo Cond. of a standing 2nd dwelling? Or just trying to find as-is value that includes the values of the plans and value inherent in the fact that the property could have a 2nd dwelling.

 

[Guardian115]

I am appraising it subject to completion

 

[Guardian115]

You are absolutely right, and I thank you for your insight and concern. In order to be competent, one must have the necessary experience and knowledge. The knowledge portion I am trying to obtain through consultation, case study, books, etc. The experience can only be gained through doing. To my understanding lack of experience is acceptable as long as it is communicated to the client and identified in the report.

 

[Terrel L. Shields]

To my understanding lack of experience is acceptable as long as it is communicated to the client and identified in the report.

and what steps you take to overcome it. You came to the right place.

IMHO, if the dwelling is a separate building, the in law is not part of GLA. BUT if the suite is attached and accessible to the rest of the house, and merely has a separate kitchenette and living quarters, to me it is just a big house. While you may identify the utility as in law quarters, that is family imho, and thus is not a rental nor boarding house nor duplex...its merely a design preference. I assume there is no radical difference in the appearance, quality, and/or condition between the two parts, then the add on likely causes the dwelling to only take on the functional obsolesence normally found in houses which have had large add ons built to them...I would use other homes which were remodeled to larger houses as comparables and if there was a substantial number (more than 1 or 2) difference in appliances/bathrooms, I would consider making an adjustment for that. I assume that such a remodel is compliant with the city regulations and/or subdivision covenants.