mother-in-law apartment

[Susie Seibert]

good morning everyone! and belated happy thanksgiving...

did one this week where there is a ranch home with an attached 3 car garage and a 1 bedroom, 960 sq.ft. mother-in-law apartment attached on the other side of the garage. do i still include the square footage of the apartment with the house? would you do the bedroom count including the bedroom in the apartment? or...do you count it as a separate entity? it truly is being used for a mother-in-law and the subject is zoned single family. i guess what's throwing me is the separation of the living areas by the garage.

your thoughts as always appreciated.

 

[Randolph Kinney]

I don't know what state or city you are in, however, is the mother-in-law apartment done with permit?

This would not be counted as GLA since it is not accessible from the main house (through garage?) and assuming it has its own separate entrance (outside entrance?). Does it have a kitchen? Is it being rented out? Does it have its own power and water meter? Does it have its own heat source?

You would not add bedroom, bathroom, etc. to the main house count. It is its own unit as you describe.

What form do you plan on using?

 

[hastalavista]

Susie-

I agree with Randolph.

The easy way to think of this is "like for like"; if you were to add the granny unit's GLA/br/ba into the main house, and then compare them to larger homes to "match" the GLA/amenities, are you really comparing like for like? (Answer: Probably not)

Likewise, if you added the extra "stuff" to the subject's configuration and then adjusted upward to actual like for like homes, you'd be giving main-house improvement value to something that isn't really part of the main house.

The approach I would take is to value this amenity separately. The first step I'd complete would be to determine if the unit was done with permits. The second (permitted or not) would be to determine what, if any, value such an amenity had in the market.

An addition or secondary unit can be non-permitted and still have market value. The chances are very high that the client is going to want to know its permit status, regardless if you give it value or not.


I suppose there could be a modification for the "like for like" rule; if in your neighborhood, many homes have a similar configuration, and they are marketed and purchased as a single living unit improvement, and you use them as "comps", then an argument could be made that the market gives value to the unit as main-unit living area with full utility; however, in that case, you would be comparing like for like!:new_smile-l:

In summary, fully disclose what you have, and then give a good explanation of how you analyzed the value (or, absence of)!

Good luck!

 

[Lobo Fan]

The first question would be the zoning. Is the accessory unit legal? Is it on separate utility meter? I usually put guest houses on a separate line and adjust for the SF of the accessory units. Combing room counts can get confusing. I have seen it done both ways. I guess you go with the least misleading version and explain in depth.

Quite often there is a noticeable difference in quality of construction between the main house and the accessory unit. Central heat versus wall heaters, granite counters versus Formica, etc. That has more to do with the adjustment than the inclusion in the main GLA.

 

[Terrel L. Shields]

The approach I would take is to value this amenity separately.

I would do it differently. I don't see it any more issue than I would a good pool room or a sun room. Yes it is not GLA, but it is attached and likely a review of the zoning description would not find it out of compliance with the SF status. Therefore, it belongs on the line below GLA and adjusted accordingly.

 

[Mike Kennedy]

SEE >> http://www.google.com/custom?hl=en&lr=&ie=ISO-8859-1&oe=ISO-8859-1&client=pub-5148275942604774&channel=6743360077&cof=FORID%3A1%3BL%3Ahttp%3A%2F%2Fappraisersforum.com%2Fimages%2Flogogoogle.png%3BLH%3A50%3BLW%3A239%3BLBGC%3AFFFFFF%3BGL%3A1%3BLC%3A%230000ff%3BVLC%3A%23663399%3BGFNT%3A%230000ff%3BGIMP%3A%230000ff%3BDIV%3A%23336699%3BS%3Ahttp%3A%2F%2Fappraisersforum.com%3B&domains=appraisersforum.com&q=accessory+unit&btnG=Search&sitesearch=appraisersforum.com






ALSO >>>>>


fannie selling guide 403.01 >>

We will purchase or securitize a mortgage secured by a single- family or a two-family property that includes an illegal additional unit or accessory apartment (which may be referred to as a mother-in-law, mother-daughter, or granny unit) as long as the illegal use conforms to the subject neighborhood and to the market. The property must be appraised in conformity with its legal use, that of a single-family or two-family property (and the borrower must qualify for the mortgage without considering any rental income from the illegal unit). The appraiser must report that the improvements represent an illegal use and demonstrate that the improvements are typical for the market through an analysis of at least three comparable properties that have the same illegal use. The lender must also make sure that the existence of the illegal additional unit will not jeopardize any future hazard insurance claim that might need to be filed for the property. We will not purchase or securitize a mortgage secured by a three- or four-family property that includes an illegal accessory apartment.

http://www.appraisaltoday.com/FNMASellingGuide.doc

 

[CANative]

You've got to find out what it is and what it means and then decide how to deai with it. Different jurisdictions define them in different ways. Sometimes In-Law unit, mother-in-law unit, granny unit, guest unit, accessory unit, etc, etc. have different meanings and are treated and permitted differently from jurisdiction to jurisdiction. Depending on the building code, it's characteristics, how it's attached, when it was built (a grandfathered, granny unit .. LOL) where it is in relation to the improvements and/or the lot, how it is accessed, parking, utility meters, septic, water, etc, etc. all make a difference.

There are too many variables to provide a simple, definitive answer on this forum. If you've never done one like this, try to get some opinions from local appraisers you know. They may even be able to provide some comparable sales. You should also consider cost and income.

 

[hastalavista]

I would do it differently. I don't see it any more issue than I would a good pool room or a sun room. Yes it is not GLA, but it is attached and likely a review of the zoning description would not find it out of compliance with the SF status. Therefore, it belongs on the line below GLA and adjusted accordingly.

Terrel-

I'm not sure I clearly wrote what I meant-
When I mean "value the amenity separately", I don't mean that the granny unit needs its own/separate appraisal.
What I do mean is that it should be valued not as GLA but as an "amenity-separate from GLA"; somewhere below the Rm/Br/Ba & GLA line.

 

[Terrel L. Shields]

Ok, I see what you mean and that's what i am saying. Greg has a good point about the exact zoning being critical.

securitize a mortgage secured by a single- family or a two-family property that includes an illegal additional unit or accessory

But if its legally attached, not the same rules right?

 

[jennifergrootegoed]

Find similar property, have comps that have this too. Check with city that it is permitted and that it can be rebuilt as it is presently. If it is more headache then it is worth. Can you still have the value excluding it. And just mention no value given to this property. Is it an old house was it grandfathered? If it has a kitchenette or bathroom it is harder to call it something else? If it is not permitted state it and also mention it is done in a professional workmanship like manner. Take pictures. Just a few of ideas. I have come across this several time.