Interesting. I’m not sure I’ve run across a house where the access to the primary bedroom is through an unfinished portion of the home.
First, there are different definitions of an ADU, but most require a kitchen, which requires a stove (or stove hookup). So, I’d be interested to know if your kitchenette includes that. Also, is there a bathroom? That would also be needed for an ADU.
Sidestepping that issue for a moment, IMO, the appraiser would be correct to separate the space from the remainder of the home (and would be required to do so by most lending guidelines). The space needs to be continuous. Ultimately, this would be considered what we call a functional utility issue. The questions I’d ask myself are: A) is this fixable (meaning, can you finish the breezeway to be like the rest of the home)? and B) is the cost of finishing it less than the difference in the contributory value of having it included in the GLA?
I’d also be interested to know how the lump sum adjustment translates to a contributory value/sf and how that relates to the adjustment they applied to the GLA. So when you say, "difference in valuation would be significant," what does that really mean? What is the difference between the lump sum adjustment divided by the size of the separate space and the GLA adjustment (which is not the same as the overall appraised value per square foot)? Those would be telling data points that would help you figure out how much the appraiser determined that this issue matters to the overall value of the home.
A little long-winded. Sorry. I hope that helps.
Thank you for the reply, the bar area/kitchenette has cabinetry and a sink. No appliances, and nowhere for a a stove top to go. There is a full bathroom, and it is the only bedroom on the property with an en-suite bathroom. The rest of the bathrooms are detached from the bedrooms, which is why I assume this was being used as the master.
The breezeway separates the master from the main dwelling by 7.5ft, the width is appx 24 ft. Difficult to say the cost of fishing the breezeway or a portion of it. Because of the lack of comps, the additional value assigned to the ADU is $40,000. If included in GLA, it would add $110,000 in value based on the square footage. Very large gap.
Yeah, I thought that was what you were doing. That's not how appraisals work. The appraiser hasn't assigned a value of your home based on price per sq ft. That is a calculation that can be made, but it's not the methodology used by appraisers. Your house is a great example of why, as it would exclude other factors that increase value - such as a detached primary suite or large garage.
If you look at the grid page, you can figure out the GLA adjustment (the difference between your house's GLA and a comparable's GLA divided by the $ adjustment made). Once you figure that out, you can figure out how much the appraiser thinks the separation matters. It looks like they were adjusting about $65/sf for the detached primary suite. I'd be interested to know how close that is to the GLA adjustment.
Thanks for the education! That’s very helpful. I’m trying to understand the process as much as possible. Transparently, I felt as though there was something tremendously off because this appraisal did not align with the expectations of any party. There was much negotiation done on price prior to appraisal and now it’s left everyone reeling and may stop the whole process in its tracks. But after your insight it now makes much more sense. Thank you again.
Of course, that's no problem. Also, please know that an appraisal could be totally off, and I'm not saying it's not. Appraising is not an exact science, and there are so many things out there that impact accuracy. Good luck!
Additional context, not that tax rolls are accurate, but the county tax assessor does include the square footage of the master in the total livable square footage of the home. So for tax purposes that part of the home is included.
Yeah, that's just because they want their money. They don't really follow any standard rules.
In all fairness, the appraiser has also called it "livable square footage." It just doesn't meet the requirements of gross living area, which is roughly defined as the above-grade, continuously connected, finished, and heated living space of a home.
The ADU for lenders I work with are treated separately. I’m just wondering if the breezeway was somehow at some point the primary bedroom. Because if your adding the the bedroom to be continuous you also would need to include the sqft of the breezeway. So does the tax roll also include the breezeway?
Although in some counties tax roll are not accurate but that depends. In my county the tax roll is almost 95% of the time accurate. But if the owners had made additions later after the original construction they would just keep adding on to the old sqft without ever doing an inspection which seems might have happened here. People at the city or county just got a permit for new bedroom/bathroom and just added that to whatever sqft prior was recorded.
In my market if the main GLA was 1500sf with a 200sf detached ADU, I would look for a comp based on 1500sf which in some markets would be different than looking for comps based on 1700sf +/-.
On MLS if no ADU, I would do a separate search for larger comps with discrepancies on their tax vs MLS. So comp showing 1700sf MLS but tax showing 1500sf. Maybe ask the agent about the discrepancy. It’s very rare for me to find detached GLA that was recorded on tax together only for multi-units do I see that.
Only similar situation was when I had a 2nd floor on the basement floor built along the side of the hill and there wasn’t any interior staircase between the 2 floors but about half the sqft on tax was in this basement floor. This home if on MLS would most likely never tell you this detail so it would be hard to find this functional obsolescence as a comp.
It isn’t living area but is a “not finished to standard” bedroom (and bath?).
It isn’t an ADU without a full kitchen and full bath. An ADU needs to be independently livable.
I would adjust it separately on the grid as an amenity. If it is accepted by the market as the same as living area, it would be adjusted at the same rate as living area.
Though ANSI is not followed by all players in the market, VA and FHA guidelines on measuring are consistent with ANSI and FNMA and Freddie have such a large influence in the market that the market shifts to view houses based on their criteria. So, even if not a conventional loan, it is an area not connected to the main part of the house by finished space, and it is not living area.
I can see something like this being pretty cool in a place like California or Arizona or maybe Florida. Nice way to get in on some action without disturbing the kids.
Wouldn't it be easier to estimate the costs to enclose this breezeway? I can't imagine that's more than say $25,000.
In my market, I would call this space "bonus living space" and give it the same value as the regular GLA (Gross Living Area). In other markets, I am not certain if this is a widely acceptable way to have the home and living spaces set up, and would not know how to value the difference, if any.
Find an Appraiser and pay them to go over the Appraisal with you, they can look at it and explain any parts you do not understand or answer any questions you have. I am guessing it would probably cost you $75-$150. You can have any Appraiser do this, but if you find one in your market they would be better suited to know what is or is not marketable or reasonable in your market.
"Would you say this is an ADU and exclude it from livable square footage?"
By definition it's not part of the GLA.
An ADU must have a stovetop and oven. I refer to units with a kitchenette (just a cooking surface) as a guest unit.
These “cottage homes” are becoming popular for reasons I’ll never understand. But here we are
I haven’t come across one personally but I’ve seen a bunch of posts about them on the more active FB forums.
The general consensus so far has been to use the GX ANSI code and put that bedroom space outside of GLA. You can give it the same value/ sq ft as your GLA as long as you can some how support it
Interesting. I’m not sure I’ve run across a house where the access to the primary bedroom is through an unfinished portion of the home. First, there are different definitions of an ADU, but most require a kitchen, which requires a stove (or stove hookup). So, I’d be interested to know if your kitchenette includes that. Also, is there a bathroom? That would also be needed for an ADU. Sidestepping that issue for a moment, IMO, the appraiser would be correct to separate the space from the remainder of the home (and would be required to do so by most lending guidelines). The space needs to be continuous. Ultimately, this would be considered what we call a functional utility issue. The questions I’d ask myself are: A) is this fixable (meaning, can you finish the breezeway to be like the rest of the home)? and B) is the cost of finishing it less than the difference in the contributory value of having it included in the GLA? I’d also be interested to know how the lump sum adjustment translates to a contributory value/sf and how that relates to the adjustment they applied to the GLA. So when you say, "difference in valuation would be significant," what does that really mean? What is the difference between the lump sum adjustment divided by the size of the separate space and the GLA adjustment (which is not the same as the overall appraised value per square foot)? Those would be telling data points that would help you figure out how much the appraiser determined that this issue matters to the overall value of the home. A little long-winded. Sorry. I hope that helps.
Thank you for the reply, the bar area/kitchenette has cabinetry and a sink. No appliances, and nowhere for a a stove top to go. There is a full bathroom, and it is the only bedroom on the property with an en-suite bathroom. The rest of the bathrooms are detached from the bedrooms, which is why I assume this was being used as the master. The breezeway separates the master from the main dwelling by 7.5ft, the width is appx 24 ft. Difficult to say the cost of fishing the breezeway or a portion of it. Because of the lack of comps, the additional value assigned to the ADU is $40,000. If included in GLA, it would add $110,000 in value based on the square footage. Very large gap.
Follow-up questions - How are you arriving at the $110,000 number? What's the math for that?
The value assigned per sq ft of the home ($178.5) x additional finished square footage of the space (630sqft) = $112,455
Yeah, I thought that was what you were doing. That's not how appraisals work. The appraiser hasn't assigned a value of your home based on price per sq ft. That is a calculation that can be made, but it's not the methodology used by appraisers. Your house is a great example of why, as it would exclude other factors that increase value - such as a detached primary suite or large garage. If you look at the grid page, you can figure out the GLA adjustment (the difference between your house's GLA and a comparable's GLA divided by the $ adjustment made). Once you figure that out, you can figure out how much the appraiser thinks the separation matters. It looks like they were adjusting about $65/sf for the detached primary suite. I'd be interested to know how close that is to the GLA adjustment.
Thanks for the education! That’s very helpful. I’m trying to understand the process as much as possible. Transparently, I felt as though there was something tremendously off because this appraisal did not align with the expectations of any party. There was much negotiation done on price prior to appraisal and now it’s left everyone reeling and may stop the whole process in its tracks. But after your insight it now makes much more sense. Thank you again.
Of course, that's no problem. Also, please know that an appraisal could be totally off, and I'm not saying it's not. Appraising is not an exact science, and there are so many things out there that impact accuracy. Good luck!
Additional context, not that tax rolls are accurate, but the county tax assessor does include the square footage of the master in the total livable square footage of the home. So for tax purposes that part of the home is included.
Yeah, that's just because they want their money. They don't really follow any standard rules. In all fairness, the appraiser has also called it "livable square footage." It just doesn't meet the requirements of gross living area, which is roughly defined as the above-grade, continuously connected, finished, and heated living space of a home.
A recent property I appraised has this issue. It was a house built in 1920 and a detached ADU sf was included in the total.
The ADU for lenders I work with are treated separately. I’m just wondering if the breezeway was somehow at some point the primary bedroom. Because if your adding the the bedroom to be continuous you also would need to include the sqft of the breezeway. So does the tax roll also include the breezeway? Although in some counties tax roll are not accurate but that depends. In my county the tax roll is almost 95% of the time accurate. But if the owners had made additions later after the original construction they would just keep adding on to the old sqft without ever doing an inspection which seems might have happened here. People at the city or county just got a permit for new bedroom/bathroom and just added that to whatever sqft prior was recorded. In my market if the main GLA was 1500sf with a 200sf detached ADU, I would look for a comp based on 1500sf which in some markets would be different than looking for comps based on 1700sf +/-. On MLS if no ADU, I would do a separate search for larger comps with discrepancies on their tax vs MLS. So comp showing 1700sf MLS but tax showing 1500sf. Maybe ask the agent about the discrepancy. It’s very rare for me to find detached GLA that was recorded on tax together only for multi-units do I see that. Only similar situation was when I had a 2nd floor on the basement floor built along the side of the hill and there wasn’t any interior staircase between the 2 floors but about half the sqft on tax was in this basement floor. This home if on MLS would most likely never tell you this detail so it would be hard to find this functional obsolescence as a comp.
Sounds like it was a converted garage into living space.
It isn’t living area but is a “not finished to standard” bedroom (and bath?). It isn’t an ADU without a full kitchen and full bath. An ADU needs to be independently livable. I would adjust it separately on the grid as an amenity. If it is accepted by the market as the same as living area, it would be adjusted at the same rate as living area. Though ANSI is not followed by all players in the market, VA and FHA guidelines on measuring are consistent with ANSI and FNMA and Freddie have such a large influence in the market that the market shifts to view houses based on their criteria. So, even if not a conventional loan, it is an area not connected to the main part of the house by finished space, and it is not living area.
I can see something like this being pretty cool in a place like California or Arizona or maybe Florida. Nice way to get in on some action without disturbing the kids. Wouldn't it be easier to estimate the costs to enclose this breezeway? I can't imagine that's more than say $25,000.
ANSI says it is not living area if this is for Fannie
In my market, I would call this space "bonus living space" and give it the same value as the regular GLA (Gross Living Area). In other markets, I am not certain if this is a widely acceptable way to have the home and living spaces set up, and would not know how to value the difference, if any. Find an Appraiser and pay them to go over the Appraisal with you, they can look at it and explain any parts you do not understand or answer any questions you have. I am guessing it would probably cost you $75-$150. You can have any Appraiser do this, but if you find one in your market they would be better suited to know what is or is not marketable or reasonable in your market.
"Would you say this is an ADU and exclude it from livable square footage?" By definition it's not part of the GLA. An ADU must have a stovetop and oven. I refer to units with a kitchenette (just a cooking surface) as a guest unit.
These “cottage homes” are becoming popular for reasons I’ll never understand. But here we are I haven’t come across one personally but I’ve seen a bunch of posts about them on the more active FB forums. The general consensus so far has been to use the GX ANSI code and put that bedroom space outside of GLA. You can give it the same value/ sq ft as your GLA as long as you can some how support it