Again, just another Bay Area ADU Appraisal cost

[Carlos Ptriawan]

Here we go, another bay area ADU appraisal topic, some folks here know that I planned to build ADU way back in 2018 but canceled and instead, I use the money to purchase another duplex still in the bay area, but that duplex I already sold in 2021 with very nice three digits IRR lol :)

So last month I was able to secure 1900k sqft  SF that comes with a "free 400sqft detached ADU", I purchased it below the price, but the appraisal is funny, they are trying to be very conservative so they put the living square as 1500 sqft as they value the first floor for only 1/4 of the price although it's livable living space. For ADU in the back, they assign it a zero value. I guess it's a seller and appraisal mistake but it comes as a buyer advantage.

I know folks suggesting using Figure's fixed-rate HEL loan that uses automatic valuation software for HELOC, do you know when I could that after rehabbing the house? Is there any approach that I could use so that for any appraisal in the future, they would price the ADU accordingly? how about if I hire an ADU appraisal expert before I sell to challenge the future appraisal? any other hacks/tips ?

( One thing that I do notice, selling the house in very good condition and good rehab especially flooring is extremely important )

[Dan H.]

An accepted offer at a price that has value on the ADU will help with the appraisal. Yes I am implying that I believe the same appraiser can set values on the same property within a range and the offer will help dictate where in the range the value is set.

However, I have seen buyers value the ADU at a far lower price than other footage. This is because there are many more owner occupied buyers that do not want to house hack then their are investor buyers. Investor buyers also should be pursuing deals and not desire to pay similar to what the OO buyer is willing to pay.

To summarize, you want to maximize the value added for the ADU but do not expect it to be similar value to the primary structure. Fortunately you got the ADU for free and it has far greater value than $0.

Good luck