Profile picture for j2744mac

Guest home (aka Mother-in-Law house) not accounted for in main house refi appraisal?

I was informed by loan officer yesterday that a required appraisal for a refinance of my home's mortgage will not account for a $50K guest home recently completed on the property. What gives? 
  • November 23 2011 - Fairbanks
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (5)

I was informed by loan officer yesterday that a required appraisal for a refinance of my home's mortgage will not account for a $50K guest home

Its unusally that the loan officer would say this.

As mentioned by others, UNPERMITTED guest units are given no value, per lender guildelines. PERMITTED guest units are valued on a case by case basis by the appraiser and value will vary depending on (1) locateion (2) quality of construction (3) lender guildelines (4) size and a whole host of factors, including zoning.

TALK to the appraiser and find out if he is going to give it value or not. Show receipts AND all permits for all new construction. Typically, though, the value given of a typical guest unit on an appraisal is LESS than what its real value is to a potential buyer in the marketplace, which youll only find if and when you sell the property.

  • November 23 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

"Was the guest house done with permits?   If not, no value can be given."

Exactly!
Whether permits are required or not, an appraiser will asses no value to an addition that is done without them. 
  • November 23 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

I'm not a lender like Brian is so I am not as certain about why this might happen.  But I do know that areas outside the city limits of Fairbanks but still with a Fairbanks address may not require permits.

I have had situations where the appraiser has stated that the additional land and in one case a guest house were not included in the appraisal because there were not comparables like it.  They were only including the house and a one acre lot even though the property had 10 acres and a shop.

The explanation was that a mortgage is for a house loan.  If we wanted to include all of the property we would need to get a different type of loan.
  • November 23 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

You may not see the $50,000 that you put into this dwelling, but you should see some extra value. Is mother-in-law unit a rarity in Alaska or is it somewhat commonplace?

I use to originate loans in Hawaii and a mother-in-law unit were very common. The value was always included in the appraisal. I don't think no comps would exclude a value for this addition if it was permitted and recorded. There has to be a reason why your's wasn't.

Happy funding, Rudi
  • November 23 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

It could be for several reasons.

Was the guest house done with permits?   If not, no value can be given.

Was the guest house something else before hand?   Like a detached garage converted into a guest house?   If so, no value can be given and the appraiser will have to calculate the cost to convert it back to a garage and deduct that from the appraised value.

The other issue is that the appraiser needs to use comparable properties to determine value.   If there are not other homes with detached guest homes that have recently sold, then it's hard to judge what the true value is.
  • November 23 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.