Non permitted guest quarters

[Carl Jackson]

I have a new appraisal with a 400 sqft separate guest room (non permitted). I am not going to adjust for this guest room, but do I need to include it in the cost approach.? If so is there functional obs, and how should I state it. Thank you for any help in this matter.

125.oo per sq.ft.= $50,000

 

[Lee in L.A.]

No value for sales comparison, no value for cost approach. :icon_idea:

 

[robert higgins]

No value for sales comparison, no value for cost approach. :icon_idea:

Lee,

says who?? Please tell me.

 

[robert higgins]

I have a new appraisal with a 400 sqft separate guest room (non permitted). I am not going to adjust for this guest room, but do I need to include it in the cost approach.? If so is there functional obs, and how should I state it. Thank you for any help in this matter.

125.oo per sq.ft.= $50,000

Carl, why would you not adjust for it?

 

[Doug Trites]

I have a new appraisal with a 400 sqft separate guest room (non permitted). I am not going to adjust for this guest room, but do I need to include it in the cost approach.? If so is there functional obs, and how should I state it. Thank you for any help in this matter.

125.oo per sq.ft.= $50,000

Why no value? If it is attached, it could be used for other things like a family room, Rec room or another bedroom. State that it is currently being used for a non permitted use and then give value for permitted use.

 

[hastalavista]

No value for sales comparison, no value for cost approach. :icon_idea:

So that would mean an estimate to replace it new, and then 100% depreciated (physical + whatever remains would be functionally depreciated); that's how the "no value" is arrived at?

That would be a way to do it if the guest house had no market value. Big if, if you ask me.
I'm involved in a case where the non-permitted guest house has a negative impact on value- so much so that it significantly (and negatively) influenced the marketability and value of the property.

Carl-

Be careful about arbitrarily awarding or withholding value- make sure your valuation decision is market derived and supported.

Good luck!

 

[Kevin A. Spellman]

Would a municipal procedure by requesting the authorities to review this structure to become legal with paying a fine and become a taxable improvement be worth it to the home owner. Would the municipal cost be low in comparison to the contributing value if it becomes legal? Does the position of this structure create a zoning violation?

Here in MA the municipalities can assess improvements that are legal and illegal. If the continue use that is considered illegal for ten years a municipality that does not police there taxable properties, the illegal use could become legal by default. Future permits can be denied in respect to zoning violations here in MA with illegal structures.

 

[Jason S]

We get those a lot. We mention it in the report but definately do not give it value as GLA.

How does the room look. Like someone knew what they were doing or does it look like it's going to fall down?

California is a "as is" state. So homeowners can buy a property with unpermitted additions as long as it's disclosed.

 

[Abzntminded]

In So Cal most subjects with an unpermitted addition like this are in neighborhoods where it's typical - and there's usually a corresponding increase in comp sales prices to reflect some value. It doesn't get included in GLA, but treated like any other significant amenity, such as a pool/spa. And it then certainly gets included in the cost approach.

 

[sunnycal]

No value for sales comparison, no value for cost approach. :icon_idea:

Nonsense! In the Los Angeles area these units are common and typically not included in the living area calculations but given a separate value in the market analysis. First of all, accessory units are allowed and second due to the fact that they are so common typically the market does give it value. Just take a look at the market around USC (where I've done many appraisals) these accessory units can bring a premium due to the high rents that owners can get from USC students. What you are suggesting is basically ignoring reality which needs to be addressed in the appraisal. Also, there are no hard and fast rules about this, it all depends on the market and it's reaction.