• 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.

Mother-in-law Suite

Status
Not open for further replies.

TennGreenApprsr

Thread Starter
Freshman Member
Joined
Jul 12, 2016
Professional Status
Certified Residential Appraiser
State
Tennessee
I recently accepted an order for 1004 SFR purchase appraisal. The listing stated 2-story with finished basement. Upon inspection, it was determined that the basement was separately metered, there was no interior access between the basement and main floor, and there was a tenant renting the basement. You would've had to walk out the back basement door, up and around to front door to get to the main level. So I communicated this to the AMC to see if they wanted to change to multi-family form or cost-to-cure to convert back to interior access between the basement and main level. Their response was "The house was not purchased as a duplex. Please have the appraiser proceed with 1004 as SFR with mother-in-law suite". I have heard of accessory units but they weren't separately metered and they weren't below grade. And I've seen in-law suites but I thought that just meant a dedicated bathroom/kitchenette to a bedroom. How should I proceed if the lender insists on keeping it as-is value on a 1004 form and referring to the basement as in-law suite?
 

bnmappraisal

Elite Member
Gold Supporting Member
Joined
Nov 9, 2011
Professional Status
Certified Residential Appraiser
State
Florida
How should I proceed if the lender insists on keeping it as-is value on a 1004 form and referring to the basement as in-law suite?
I run into in law quarters vs multi's often in my market.

The first thing I look at is zoning! This goes back to H&BU analysis
 

Amy Perkins

Senior Member
Joined
Jul 20, 2003
Professional Status
Certified Residential Appraiser
State
Tennessee
California law just changed their policy on second dwelling units, I suppose this will be an issue a lot.
 

Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Which local governing municipality and what are the building and zoning requirements for a legal in-law apartment/ second accessory apartment and/OR conversion of a single family res to two family dwelling with segregated apartments?

What HBU is market-indicated?
 
Last edited:

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
I recently accepted an order for 1004 SFR purchase appraisal. The listing stated 2-story with finished basement. Upon inspection, it was determined that the basement was separately metered, there was no interior access between the basement and main floor, and there was a tenant renting the basement. You would've had to walk out the back basement door, up and around to front door to get to the main level. So I communicated this to the AMC to see if they wanted to change to multi-family form or cost-to-cure to convert back to interior access between the basement and main level. Their response was "The house was not purchased as a duplex. Please have the appraiser proceed with 1004 as SFR with mother-in-law suite". I have heard of accessory units but they weren't separately metered and they weren't below grade. And I've seen in-law suites but I thought that just meant a dedicated bathroom/kitchenette to a bedroom. How should I proceed if the lender insists on keeping it as-is value on a 1004 form and referring to the basement as in-law suite?
Whether or not the basement unit cannot be accessed from the interior of the rest of the structure or is separately metered and rented is not dispositive in determining whether the subject property is a 1 unit property with an accessory unit or a two unit property and there really is no good, generally accepted definition that exactly defines the difference between a 2 unit property and a 1 unit with accessory unit, Thus, no matter how it is labelled, as long as it is fully and properly described, the report will not be misleading.

Additionally, you need to look at the Fannie appraisal guidelines, which specifically do allow the appraiser to appraise a two unit property on a Fannie Mae form 1004 under many circumstances:

B4-1.2-01, Appraisal Report Forms and Exhibits (04/15/2014)
Introduction

This topic contains information on appraisal report forms and exhibits, including:
  • Scope of Work
  • List of Appraisal Report Forms
  • Exhibits for Appraisals
  • Exhibits for Appraisals with Exterior-Only Property Inspections
  • Appraiser Certifications and Limiting Conditions
Scope of Work
Appraisers must use the most recent version of the appraisal report forms and include any other information, either as an attachment or addendum to the appraisal report form, needed to adequately support the opinion of market value. Although the scope of work for the appraisal or the extent of the appraisal process is guided by Fannie Mae’s appraisal report forms, the forms do not limit or control the appraisal process. The appraiser’s analysis should go beyond any limitations of the forms, with additional comments and exhibits being used if they are needed to adequately describe the subject property, document the analysis and valuation process, or support the appraiser’s conclusions. The extent of the appraiser’s data collection, analysis, and reporting must be determined by the complexity of the appraisal assignment.

List of Appraisal Report Forms
Lenders must ensure that appraisal reports are completed on one of the following Fannie Mae forms. The table below provides Fannie Mae’s acceptable appraisal report forms (see Single-Family Forms for a complete list).

Form Purpose
Uniform Residential Appraisal Report (Form 1004) For appraisals of one-unit properties and units in PUDs (including those that have an illegal second unit or accessory apartment) based on interior and exterior property inspections.
Form 1004 also may be used for two-unit properties, if each of the units is occupied by one of the co-borrowers as his or her principal residence or if the value of the legal second unit is relatively insignificant in relation to the total value of the property (as might be the case for a basement unit or a unit over a garage). In addition, appraisals for units in condo projects that consist solely of detached dwellings may be documented on Form 1004, if the appraiser includes an adequate description of the project and information about the homeowners’ association fees and the quality of the project maintenance. Appraisals reported on Form 1004 must be completed in accordance with the UAD Specification.

FYI:


Here is how HUD/FHA defines accessory units:

Accessory Dwelling Unit (ADU) An Accessory Dwelling Unit (ADU) refers to a habitable living unit added to, created within, or detached from a primary one-unit Single Family dwelling, which together constitute a single interest in real estate. It is a separate additional living unit, including kitchen, sleeping, and bathroom facilities

Take a look at the attachment

 

Attachments

  • HUD powerpoint.pdf
    789.6 KB · Views: 22
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