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Legal duplex to be appraised as an SFR?

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AMF13

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I have a legal duplex, 2 houses on a lot. Front house is 2121 SF, back house is 894 SF. Client wants it appraised as an SFR with a guest house, or an SFR with no value to 2nd unit.

The reasoning is the highest and best use would be SFR, as it is not your typical matching units rental property duplex.

Is this kosher? :?

I don't want to misrepresent what the property is. Oh, it (of course) looks like it would appraise higher comping to SFRs rather than 2 or 3 unit properties. Whay would you tell the client? Can anyone point me at a section of USPAP that deals with this issue?
 

David S. Roberson

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Are you sure the Client doesn't want it misrepresented to get a lower rate?
 

Tim Hicks (Texas)

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What is the zoning? Is the guest house legal? It is possible to have a home with a small guest house on the property, but generally the guest house has a diminished value like other super-adequacies in this market. If it is zoned multi-family then itis a multi-family property. If it is zoned single family residential, you need to check if the guest house is legally permissable. If not it has not value. If it is, then you need to research how much this guest house would be worth. In our area, if the guest house is old and less desirable, I would only gie them $4,500 against a home without a guest house. If it was decent $8,900. If it was really nice or situated in a very reputable area with many guest houses or apartments it may be worth more. So the answer is, it depends.
 

AMF13

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Are you sure the Client doesn't want it misrepresented to get a lower rate?

That could be, but I'm not going to be misrepresenting anything. I'll state it's listed as a legal duplex, zoning is Multifamily.

So it's legally permitted and legally a duplex, although not a typical duplex. But, if H&B use is SFR, is it OK by USPAP to appraise as an SFR? That's my question. :?
 
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Lee,

Are either of them rented or leased? If so, it's an income property. It is what it is. Doing it otherwise for lending purposes would not be right.

You could do it as a hypothetical disclosing the LOs request along with exactly what it really is.

Just do what is right. The H&BU can and should be addressed, but it still is what it is.
 

wyecoyote

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Lee in L.A.

So this is two detached houses?

So it's legally permitted and legally a duplex, although not a typical duplex. But, if H&B use is SFR, is it OK by USPAP to appraise as an SFR? That's my question.

As I read this posting the property is classified as a duplex by the local governing authority.

Here we get these all the time two detached houses. This is legal in most of our counties as long as they were either 1. built prior to current zoning regulations or 2. the second structure is 1/2 the size of the main living structure. (This is zoning in our area). We treat this as a single family residence (the main house) and the second as an accessory dwelling unit (guest house). Is this legal in your area? Though I would call the zoning/building and planning office and find out for sure.

Ryan
 

AMF13

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California
Just do what is right.

That's what I'm trying to figure out Pamela. I believe they're both owner occupied. Lenders contention is H&BU is SFR rather than income, as the front house is much larger than the back house.

Yes Ryan, they are detached. Built the same year. Legally listed as duplex, although I've seen other properties with similar set up that were legally SFR and Guest. So, apparently it just depends which way they filled out their permits apps.

I guess the H&BU is the big issue to determine how I treat it.
 

John Hassler

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Lee

You have a highest and best use issue. Check with planning and ask if a sfd with guest cottage is a legal use under the duplex zoning. If it is legal AND that use brings the highest value then appraise it as such. If two detached rental units on one site provide the highest value, AND are a legal use, appraise it that way. Whether any or all of the structures are owner or tenant occupied at the present time is irelevant. This does, however, make for a lot more investigation on your part. Charge accordingly.

We have duplex zoned lots here where a single SFR is allowed under that zoning AND that is the H&B use, not two units.

John Hassler
 

AMF13

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This does, however, make for a lot more investigation on your part.
Aye there's the rub.

Thanks John and all for help in getting a clearer idea of what I need to do with this.

Lee
 
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Florida
Good answer John.

Most of the SFRs with a detached cottage or apt over garage, etc. in my market have rented the extra unit. Most are also legal use for either as guest house or rental unit, either way. It's rare to find one of these in Multi-family zoning as most in this zoning are attached duplexes, quads or larger.

If the other unit is not rented, it is a guest house/cottage at this time. It's hard for me to understand how this would be the highest return dollar wise as an income could be had from renting it. Then again, when a high end property has a guest house, it usually really is used for guests and would rarely ever be used for a rental unit. H&BU on something like this is difficult - as in basically doing 2 appraisals to determine which one really is the H&BU.

Explain this to the LO and up your fee. Good luck! This is a tough one.
 
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