In this episode, we covered issues that might arise when you receive an appraisal on your detached guest home, also know as a casita.
There are three perspectives to consider:
We’re just going to give you the quick overview here, but for the full details, be sure to listen to the episode in the video above or on Apple Podcasts. Let’s get into it.
If you purchase a home and the casita is already on the lot when you receive your appraisal, you’re going to notice that your casita will not be included in the home square footage, rather it will be included as a line item adjustment. If your house had a casita when you purchased it go back and take a look at the appraisal and you’ll notice that there was a line item adjustment for it then too. When you are refinancing, make sure you have all the information in front of you. If you’re refinancing for rate and term, you want to get the maximum value for your home so that your loan-to-value is as low as possible.
Appraisers most often come up with these values from sales of comparable homes that were recently sold. Now, casitas and guest houses are rare, so the sample size is a lot smaller than that of property without, which is one complication when it comes to getting accurate appraisals.
Unlike when it comes to refinancing, the traditionally low appraisal of casitas can be wonderful from a purchasing perspective.
It’s generally going to be hard to build a casita for less than around $70,000. We’d say the average rate is somewhere between $70,000 and $120,000. However, if you get an appraisal for it the line item will likely only say something around $20,000 or so. This isn’t to say casita’s can’t be worth it, but it’s something to keep in mind.
We’ve also received a few questions about attaching guest houses to your main home. In these cases, be sure to talk to your city first since it has to be coded and there is a permitting process involved. That being said, it is possible in a situation where it’s close enough and it makes sense. In the cases where you can attach it and it flows, if it’s a part of the main living dwelling then the appraiser will treat it as one level.
The square footage is not added to the main living area of the primary home.
The appraiser only gives a line item adjustment for a guest house.
It is common to have an adjustment of only $20,000 for a guest house even though it could have cost $100,000 to build.
Appraisers need to use comparable sales that have detached guest houses, which is hard to do.
Guesthouses are hard to compare because they are going to vary greatly in age, quality, and size.
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Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.
Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.BACK TO LIST