One with Accessory Unit?

[monkey525]

I came across a property that has a detached garage and its second floor had a BEDROOM, WET BAR/KITCHENETTE, FULL BATH, WASHER/DRYER, and a heating/cooling system. The homeowner says that it's a guest room. Couple things..
1)Is this technically called a One with Acessory Unit?
2)The best way to determine the worth of this amenity is to look for the most similar home featuring this "guest house" (sales comparison), correct? What if there are no similar sales?
Need feedback, since I'm a :new_newbie:! Thanks in advance..

 

[CANative]

Feel free to use HUD's definition of accessory unit. Sales of similar properties is the best way to develop an opinion of contributory value. So is cost analysis and income analysis. You may have to use a combination of all three.

Accessory Unit / Accessory Dwelling Unit
The accessory unit is defined as a habitable living unit added to, created within, or detached from a single-family dwelling that provides the basic requirements for living, sleeping, eating, cooking, and sanitation.
Accessory Dwelling Units (ADUs) are commonly understood to be a separate additional living unit, including separate kitchen, sleeping, and bathroom facilities, attached or detached from the primary residential unit, on a single-family lot. ADUs are usually subordinate in size, location, and appearance to the primary unit and may or may not have separate means of ingress or egress.
Attached units, contained within a single-family home, known variously as "mother-in-law apartments," are the most common type of accessory dwelling unit. Accessory units usually involve the renovation of a garage, basement, or small addition to a single-family home.
FHA Criteria
“Accessory dwelling unit" means a subordinate dwelling unit may or may not be incorporated within, or detached from a single-family structure. Accessory units may not be subdivided or otherwise segregated in ownership from the primary residence structure.
Some accessory units may predate the adoption of local zoning ordinance and may therefore be classified as legal nonconforming units.
Utility Service Requirements
An accessory apartment must be connected to the utilities (except telephone, television and cable) of the dwelling unit and may not have separate services.

 

[hastalavista]

I would say you are right on both counts.

I would try to determine if the area is permitted or not. Without some comment as to permits, it is likely that the lender will ask you after you submit your report.

If there are no similar sales, that presents a bit of an issue. There are several alternatives (each with its own merits):
A. Go back in time; there's probably an example that does exist in your market (make sure to consider the differences in market conditions; then vs. now).
B. Go to a competing neighborhood. If it is truly competing, what makes sense there should make sense in your neighborhood.
C. Income approach (I usually don't recommend this. Many times, due to zoning, one of the units has to be owner-occupied anyway, so the additional amenity is not a pure income-instrument).
D. Cost approach. This is probably more useful in making sure you don't over-value the amenity than establishing its actual contributory value.
E. Consider the guest unit is a super-adequacy and has no contributory value in the market (unlikely).
F. Consider the guest unit has contributory value similar to some other type of amenity (pool house, pool, finished garage, etc.). Effectively you are using the other amenity as a proxy for your guest house amenity's value.
G. Conclude there is value, but determine it cannot be quantified (identified at a specific point-adjustment). List it in the sales grid, and for the comps, rather than making a $ adjustment, put "inferior". State that you concluded the guest amenity does have value in the market but that you could not identify a value-adjustment; therefore, you've considered it in the final value placement; this would argue that you value the subject at the upper-end of the adjusted value range rather than lower. This is known as making a qualitative and not quantitative adjustment. You are ranking the subject better than the comps and concluding a value opinion at the upper-end of the adjusted range.


Good luck!

 

[Mile High Trout]

Canative,

It sounds like the OP is dealing with a bonus room above garage, which would meet accessory unit standards there. (very informative quote post, thank you).

But how would that play out in an appraisal scenario if lets say the comparables were true rentals with metered services? Would even a matching above garage bonus room with individualized metering for the specific use of rental be considered a credible comparable? Could that be possibly considered uncomparable due to the definition of accessory unit?

Which factor trumps in the reconciled value analysis, the alignment with definition of accessory unit, or the alignment of similar overall build character? (or other)

 

[CANative]

"Bonus Room" is Realtor-Talk.

 

[HF Mudd]

I would say you are right on both counts.

I would try to determine if the area is permitted or not. Without some comment as to permits, it is likely that the lender will ask you after you submit your report.

I came across a similar situation a couple of years ago - an unpermitted accessory unit above a garage, which was being rented (the homeowner had to call his tenant to get permission for access) - I ran away from this appraisal as fast as I could and was happy to get a trip fee.

 

[Kevin Mc]

- I ran away from this appraisal as fast as I could and was happy to get a trip fee.

Wimp....

 

[monkey525]

Thanks everyone for your feedback. HF Mudd, if this was being rented out, I'd probably try running away from it too.. haha. In this case, it's a "bonus room" so i'll first find out if it's legally permissible then look for similar sales featuring this similar "bonus room" in this market.. I'll brb!

 

[Tim Hicks (Texas)]

Thanks everyone for your feedback. HF Mudd, if this was being rented out, I'd probably try running away from it too.. haha. In this case, it's a "bonus room" so i'll first find out if it's legally permissible then look for similar sales featuring this similar "bonus room" in this market.. I'll brb!

Why would you call it a "bonus room?" It sounds like a guest quarters (accessory unit) on a detached garage. It has all the amenities of an accessory unit. The "Realtor talk" bonus room is just a room, not a fully independent living area. It is not GLA. I would think they are quite common in most parts of the country, but not a predominant improvement. I bet if you do enough research you will find a few properties with a similar improvement sold over the last few years in that market area.

 

[monkey525]

Oh, I meant accessory unit/guest room (I called it "bonus room" because I hate bogus renovations like this - they could've doubled their value if they used this renovation cost to EXPAND their GLA (like all other homes in the area) instead of creating a room above the garage) I just looked at the MLS database for few hours and can't find a single sale like this within a year and within 2 miles in this market. This is a suburb/city so I can't go too far out. My eyeballs are about to fall out ! I can't count this accessory unit as a GLA but can I use a bigger property and give more weight on it and explain (if they have a in-law suite/au-paire and it appears to make a diff in the market price)?