Lenders/Appraisers for ADUs

1 Reply

Hello Everyone!

I am in escrow to buy a house. We will be converting the garage into an Accessory Dwelling Unit (property is in Los Angeles). It is for my primary residence and obtaining an FHA 203(k). Once we finish the work, we will want to refinance to take of the mortgage insurance. The problem I am having is finding a lender that uses appraisers that give a true value to the ADU. I have seen between $0-$25,000, which conceptually it's worth more.

Does anyone know of any lenders that can give it a true/higher value?  Any help would be appreciated.

Thanks!

Rick

Originally posted by @Rick Albert :

Hello Everyone!

I am in escrow to buy a house. We will be converting the garage into an Accessory Dwelling Unit (property is in Los Angeles). It is for my primary residence and obtaining an FHA 203(k). Once we finish the work, we will want to refinance to take of the mortgage insurance. The problem I am having is finding a lender that uses appraisers that give a true value to the ADU. I have seen between $0-$25,000, which conceptually it's worth more.

Does anyone know of any lenders that can give it a true/higher value?  Any help would be appreciated.

Thanks!

Rick

 The value is going to be based on comparables if it's residential financing you are after. 

If homes with ADUs are selling for $25k more than homes without ADUs that are otherwise similar, that is the true value. If they are selling for $100k more, then that is their true value. And so on. Lenders can pick the appraisal management company, but not the appraiser. 

Commercial financing can use appraisals based on rent, but the terms/conditions aren't as nice as residential.