Valuation Overview of Accessory Dwelling Units

Accessory dwelling units (ADUs) are a growing trend across the U.S. They have been around for years and often not identified as ADUs because they were not part of the zoning. As more families are finding it necessary to accommodate young adults not quite able to afford their own place, they are staying home longer and a somewhat separate space like an ADU is a good solution. Many families are caring for aging family members and find an ADU is the best choice. As many municipalities began to see the growing need to address them in the zoning ordinance, they have now become a valuation challenge for appraisers. In some areas the zoning does not allow them even though homeowners are adding them on without identifying them as ADUs. (Non-conforming status is an appraiser nightmare) Like green homes, the data is not readily available or is limited at best. The secondary mortgage market has very tight guidelines for ADUs and that presents the biggest challenge for appraisers. This seminar will focus on overcoming data challenges and review short dilemmas that illustrate methods to solve the value problem.