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Yet Another 2 On 1 Question

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Grace

Sophomore Member
Joined
Jan 17, 2002
Professional Status
Licensed Appraiser
State
California
I've read the 2 on 1 posts, however, I'm still not sure how to value a 1,400 sf "guest unit". Actually, it's a 1,482 sf 1994 manufactured home on a permanent foundation. Same year and condition as subject. I've read that some appraisers use estimated rental value x 12. Some said to value it like you would a barn, shop, etc. Here in northern california, we value a barn between 4 thousand to 12 thousand. How could I value a full sized home for 12 thousand? I don't want to make a huge adjustment (70k) for the "guest unit" but I need to make some kind of adjustment. The owners mother lives in the guest unit and does not pay rent. The "other" appraiser, I'm told called it a granny unit, however, a granny unit can't be larger than 600 sf per zoning regulations.

I know I'm beating a dead horse with this issue but I have to have this lovely report back to lender in a few days.

Thanks in advance.

Grace
 

Rich Hahn

Senior Member
Joined
May 2, 2003
Professional Status
General Public
State
Colorado
Does it comply with zoning?
Was it permitted?
Is the title merged?
Does it have its own utilities?Water-Well, Septic-Sewer, Gas-Propane

It depends..
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
If the property meets the conditions outlined by Rich plus determining the H & BU, why don't you appraise for what it is. It seems like it's two units. I realize the owner's mother lives in the guest unit but a potential buyer might view it differently relative to the potential use. In response to valuing it the same way you would a barn. I'm not sure why you would that. The two buildings have completely different utility. Now if you do an analysis of sales in the market and determine that a barn and second unit have the same contributory value, that would be a different story. Sounds like a fun job. :eyecrazy:
 

KD247

Senior Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
My answer is: D) Expand the search parameters for comparable sales.

The guest house is not a barn, it's probably not viewed by the market as an income property (I could be wrong on that one), and it could possibly have value even if illegal and unpermitted.

I would go back in time and further away until I found one or two comparable properties (maybe even a prior sale of the subject). Then establish a chain of relationships that you can link to your other sales (being careful to mix in a little intuition and your local knowledge). You've already established a range for your adjustment; more than $12,000 (if it could substitute for use as a barn) and less than $70,000 (I'm assuming that's the estimated cost of the guest house). For a reality check, call a few local brokers and ask for their opinions.

If there's insufficient data, don't go nuts trying to achieve an unrealistic level of precision. But it would be polite to explain to the underwriter how you arrived at your opinion.
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
Check the zoning....i.e. are 2 units on one parcel allowed? If not, it's probably illegal and probably shouldn't be given any value at all. From your description it does not fall into an in-law unit.
 

Grace

Sophomore Member
Joined
Jan 17, 2002
Professional Status
Licensed Appraiser
State
California
The subject is legally zoned and allows for a "second residence". I didn't mean to say that I was going to call the guest unit a barn, just that I would put "guest unit" at the bottom of the grid on page 2 of the 1004 and make an adjustment for it, like I do with barns. I just don't know how much to value a full sized home as a guest unit. The lender is already upset because I'm "making an issue" out of what the other appraiser called a granny unit. The lender stated "I just hope it gets by underwriting" and I told her it's my experience that nothing gets by the underwriters. I was just surprised, or maybe disappointed is the better word, that she would want something to "get by underwriting".

Anyway, I like the statement made by Koert, ..."don't go nuts trying to achieve an unrealistic level of precision" that's so true, you would think I'm doing a narrative instead of a 2055/with interior.


Grace
 

Frederick R. Ruffell

Senior Member
Joined
Jan 21, 2002
Professional Status
Certified General Appraiser
State
California
Originally posted by Grace@May 12 2003, 04:07 PM
The subject is legally zoned and allows for a "second residence". I didn't mean to say that I was going to call the guest unit a barn, just that I would put "guest unit" at the bottom of the grid on page 2 of the 1004 and make an adjustment for it, like I do with barns. I just don't know how much to value a full sized home as a guest unit.
Grace, What you have is 2 UNIT PROPERTY!!!!!! and the lender is trying to hammer a square peg into a round hole and you are the hammer (not my analogy). Do this on a 1025. It aint no "granny flat, Accessory apartment, in-law unit, or guest quarters"... it is a 2 unit property often refered to as "2 on 1"... NOT a duplex. Just because the previous appraiser was ignorant or duped by the client does not mean you have to be. "Now go do the right thing" :yellowblack:
 

Judy Whitehead (Florida)

Senior Member
Joined
Jan 20, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Most of the lenders I deal with and I have had this happen before, want no value attributed to the second home, particularly if it is a manufactured home. Most of the time when I have one of these, I simply appraise the house, take a picture of the extra home, and state in the addendum that no value was given to the second residence on the property per the lender's request. So, if I were you, I'd make sure that the lender even wants it included in the appraised value (i.e. slap some wheels on and and tow it away imaginarily speaking, that is!)
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
Judy:

I don't think we have a responsibility to do something simply because that's what the lender wants. Grace has stated that the property is zoned legally for how it is currently improved. To value the property other than two units would be misleading IMHO. It would certainly seem to me that if this property were to be placed on the market, potential buyers would likely view the property two ways. The first would be as two rental units on one parcel. The second would be to live in one unit and rent the other one. In any case, there will be someone living in both units. This seems to be a case of the tail wagging the dog.
 
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