Non-permitted 2nd unit?

[Fernando]

I will be seeing a property and afraid it may have an illegal ADU.
I checked the comps going as far back as two years and very few.
If no comps available, can I give it no or less value. If ADUs were profitable, there would be more homes with ADUs.
Also subject is in high end neighborhood.

 

[Fernando]

I called owner and he said downstairs just had a bathroom added.
Good, no ADU. I was afraid owner added a kitchen.

 

[sputnam]

An appraiser assigned to use a URAR form can not decide to use a GP form withut a client permission! Imo, 99% of the clients who gave the order out for a URAR form would not allow a GP form to be used and the 1% that allow it would later ask the apprsial be put on a URAR form because whoever was asked agreed out of ignorance.

Maybe... but an appraiser assigned to use a URAR form can contact the Client and tell them that the form is inappropriate for the assignment... and they can decline the assignment... or withdraw if they are that far along.

 

[J Grant]

Maybe... but an appraiser assigned to use a URAR form can contact the Client and tell them that the form is inappropriate for the assignment... and they can decline the assignment... or withdraw if they are that far along.

A client knows that to submit to the GSE s it must be on a URAR form.

Yes, If the appraiser is not competent for that assignment or simply does not want to do the assignment due to complexity, they can decline it. Or they can tell the client they are fine to continue the assginment; however, they can not ignore the ADU and value as if it does not exist.

Chances are the OP bought this on themselves wrt what the client is asking for (ignore the ADU) - they might have raised issues with the client that the garage is an ADU now and has no permits, so the client came up with a "solution"l - and the solution is wrong, since the client is not an appraiser. Appraisers should know that the GSEs will accept non-permitted now - which is not the same as not legal. Though the GSE;s might accept an illegal use as long as illegal use comps are provided? We need to check that, though HBU must be legally permitted to meet that test lest there be any confusion, legally permitted means legally allowed - it does not mean building permits were pulled.

 

[J Grant]

AI Overview


No, a General Purpose (GP) appraisal form
cannot be used for an appraisal intended for a Government-Sponsored Enterprise (GSE) loan (such as those for Fannie Mae or Freddie Mac).
GSEs require the use of specific, standardized forms, such as the Fannie Mae Form 1004 (Uniform Residential Appraisal Report) or Freddie Mac Form 70.

Key Differences

• Intended Use: GP forms are designed for non-lending purposes (e.g., divorce settlements, estate planning, tax appeals, or commercial properties not involving a conventional loan). GSE forms include a specific "intended use" clause stating the appraisal is for a mortgage finance transaction for the lender/client.
• Standardization: GSE forms adhere to strict, standardized guidelines called the Uniform Appraisal Dataset (UAD), which mandates specific data points, definitions, and formatting. GP forms are more flexible and use less technical language, making them easier for non-lender users (like homeowners or lawyers) to understand.
  • Compliance: Using a GP form for a conventional lending purpose would not meet the compliance requirements of Fannie Mae and Freddie Mac, and a smart lawyer could get such a report thrown out in court if it were ever contested for a lending matter.

 

[sputnam]

AI Overview


No, a General Purpose (GP) appraisal form
cannot be used for an appraisal intended for a Government-Sponsored Enterprise (GSE) loan (such as those for Fannie Mae or Freddie Mac).
GSEs require the use of specific, standardized forms, such as the Fannie Mae Form 1004 (Uniform Residential Appraisal Report) or Freddie Mac Form 70.

Key Differences

• Intended Use: GP forms are designed for non-lending purposes (e.g., divorce settlements, estate planning, tax appeals, or commercial properties not involving a conventional loan). GSE forms include a specific "intended use" clause stating the appraisal is for a mortgage finance transaction for the lender/client.
• Standardization:GSE forms adhere to strict, standardized guidelines called the Uniform Appraisal Dataset (UAD), which mandates specific data points, definitions, and formatting. GP forms are more flexible and use less technical language, making them easier for non-lender users (like homeowners or lawyers) to understand.
  • Compliance: Using a GP form for a conventional lending purpose would not meet the compliance requirements of Fannie Mae and Freddie Mac, and a smart lawyer could get such a report thrown out in court if it were ever contested for a lending matter.

Why are you assuming that the appraisal in question is for a GSE loan? I didn't see that in the OPs post.

 

[J Grant]

Why are you assuming that the appraisal in question is for a GSE loan? I didn't see that in the OPs post.

Because 99% of res mortgage appraisals are for a GSE loan.

 

[Tom D]

The issue here is to present the facts, or at least your concept of them, no matter the form. Lenders have underwriters to say yes, no or maybe.

I understand the posters concern. The owner for whatever bad reason did it without permits. Then, whether it was even legal to be done. The owner was being to slick to avoid whatever.

But i don't know l&i rules there. Half of my urban city has rear addition added, or converted, without permits. But a full detached adu isn't a shed conversion. If you worry that much, give it back, better that an unhappy lender. f the owner. The happy buyer today, is the new uhappy owner when it becoms a problem.

 

[Sadie]

Why are you assuming that the appraisal in question is for a GSE loan? I didn't see that in the OPs post.

If you are using a GSE form, you need per USPAP to comply with their guidelines. If you are not, don't you think its important to know if the improvements are legal? As in they can be rebuilt if destroyed. I have seen non permitted stuff removed. So figuring it out is kind of important.

 

[Surf Cat]

Half of my urban city has rear addition added, or converted, without permits.

Lots of places do.....that's why I can't believe the OP's subject is the anomaly.

Digging for gold on the MLS is part of the appraiser's skill set. Unpermitted additions, a trafficked throughfare, fronting a school, siding commercial....find one.