Way to go!
Webbed, sorry my bad, I thought you were asking a question. The lack of question marks leads me to believe you are making a statement. Yes I agree there is a difference between just a second kitchen and a Unit (legal or otherwise, 2nd, 3rd, 4th or accessory). I have yet to come across a 2nd kitchen only, all by itself. Typically they are associated with additional living space that includes bathroom facilities. I am going to have to check the municipal code thingy again to see if a second kitchen by itself is permitted in a SFR.
Now you are on top of things! Way to go, proud of you!
Yes, a good job of breaking these things down into all the varying definitions of what the subject may, or may not be, is strongly needed before proceeding. All the stuff you just covered. SFR with 2nd kitchen, SFR with accessory dwelling unit (ADU), SFR with second unit, or 2-4 family structure. Followed by break down of Legal, Illegal, or Legal Non-Conforming. Unless one knows the way the local zoning and codes interact against the subject, one cannot determine how to proceed.
IN all cases the overwhelming issues are determing market reaction, the invalidating of hazard insurance, and the jurisidictional authority police powers to force removal. Appraisers, very often, try to ignore all three of these. So do lenders, but that second one REALLY hangs up any decent major lender. Having no security for a loan, except the land, after the house goes up in smoke and the fire insurance company refuses to pay off, is not risk friendly at all.
Sounds like you have situations similar to my area. These things certainly exist, but if ANYBODY bothers to disclose them properly to buyers nobody allows sales to go through with such illegal alterations to a SFR property. Liability and lendability raises a very nasty face when all parties are forced to face the facts. Therefore, almost no verified sales of similar situations, not corrected, are available. Only ones where it is found the buyer(s) and lenders were never informed, which does not meet the definition of Market Value and why the lender lent.
Next, and I expect this to weird out those reading my "don't mislead" comments about not following certifications and doing something else. Because it may sound to some like I am saying the opposite now. I'll preface this with always know which way your state board members think on this one, because it can be very confusing to many of us. Ok, here we go... Once you "Base" your appraisal on a Hypothetical Condition your report itself should in fact reflect that hypothetical all the way through the report.
REASON: The report is hypothetical !!! So is the analyses. Therefore, in this case, I agree with your AMC chief appraiser. If you are conditioning under a HC for the property to be made "Legal" you would check off the "Legal" box on the form as your report is "Based" on the HC. Assuming one of the intended users is Fannie Mae, no "As Is" value would be needed as Fannie was handed an exclusion under the FRT definition. That said, I have seen nothing about what the feds taking over Fannie means in that regard. I am thinking we won't see anything on it either.
The above said, and this is where the confusion could be, you are REQUIRED whenever using a HC to explain what the actual truth is that exists at the time of the effective date. Therefore, you must and should begin the very first part of your additional addendum comments with several paragraphs spelling out the exact cause of the use of the HC, what the hypotheticals are,
and their affect on the analyses.
As well as loudly warning the client and any intended users that the report is "Based" on the HC!!!! I personally take this to be no small matter. Far too many appraisers only use one or two completely inadequate sentences, if they hardly provide anything at all. I distinctly recall one (cough) "designated" appraiser that only put "
A hypothetical is used." in her report. That was it, no other comment(s) of any kind. Doing that blatent of laziness would be a total USPAP violation in my book.
Ok, it's the weirded out appraiser's turn to have a different opinion...
P.S.. It is a very good idea to document that you fully communicated the total HC to the client, for their agreement to it's use,
before you proceeded with the assignment!
