I am in the process of purchasing a single family 5 bedroom 4 bedroom home with an attached mother-in-law suite. The home is zoned as a single family home. The appraisal recently came back and it seemed low to me so I called the appraiser to get a better understanding. The appraiser said that he did not include the mother-in-law suite (1,000 SQ ft 1 bedroom, 1 bath) in his evaluation of the home. Is this typical?
If it is permitted and usable that is not typical he should have found other homes with a similar feature. How old is this home and are there others in the area with MIL quarters?
Thanks Aaron! The home was built in 1969 and is brick and siding
There are not a lot of homes in the area a MIL suite. The appraiser said they come up on the market about every two years in this area.
@Verletta Saxon okay so it is an uncommon feature but if it was done correctly he should also not be ignoring it, however he has no real basis to say what it is worth either. He is in a tough situation but it should be considered.
I agree that it should not have been completely ignored. If it is permitted and heated/cooled living space - it should have some $ attributed to it. Might not be the same $ value per sq ft as the main house, but it certainly isn't worthless.
I really question why he would take that approach - ESPECIALLY since you stated that its physically attached to the main house. How much lower than expected was the appraisal? May be worth it to challenge if the difference is significant.
On a new build I had an appraiser value a detached garage apartment for less that 1/2 the p.s.f. value of the main house.....
Thanks Justin! I am not sure what the value was. When the seller originally put the property on the market it was over $290,000 and the appraisal came back under $240,000. When I spoke to the Assessor he said that he could not give me a different value on the home without doing a completely different appraisal with a new set of comps.
@Verletta Saxon - what does the seller have to say? Are they willing to negotiate with you based on the low appraisal?
If not, and you want the house, I would challenge the appraisal and request that it be revised based on the additional SQ footage. You should not have to pay more for him to correct the issue either.
Although this may not directly answer your question, I probably wouldn’t argue the appraisal, but rather negotiate the price. In my opinion, this gives you a lot of leverage to haggle on the price.
I say this because typically lower appraisals scare homeowners into selling fearing future problems with other potential buyers.
That would be my first approach; if the seller doesn’t budge, then perhaps consider requesting a second opinion on the appraisal.
To your success!
Permitted or not, it is attached to the house so how could the appraiser not take it into account? If it is a buy and hold I would take the appraisal as is and if the seller wants to fight it then let them, otherwise it is an oversight in your favor. Just expect this if you go to sell it in the near future, and work with the city to get it changed.
Thanks Eric! I agree that the appraisal is working in my favor as a buyer but when I'm ready to sell that will be a sticking point. I am thinking about the end at the beginning of purchase.
I am still in the process of buying the home so I'm working with my realtor on negotiations the price of the home.
Thanks David! I will start with negotiating the price and then move to challenging the appraisal.