A California appraiser is valuing a property that has both an ADU (Accessory Dwelling Unit) and a JADU (Junior Accessory Dwelling Unit) built under California's recent ADU legislation. Using the cost approach, how should the appraiser handle these additional units?
Correct Answer
C) Estimate the replacement cost of each unit separately, apply appropriate depreciation, and include them as part of the total improvement value
Under the cost approach, the ADU and JADU are improvements to the property that contribute to its value. The appraiser should estimate the replacement cost of each unit separately (reflecting current California building standards and ADU requirements under Government Code §65852.2 and §65852.22), apply appropriate depreciation based on age and condition, and include the depreciated values as part of the total improvement value.
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When using the cost approach for a California property, all of the following are deducted from the replacement cost new to arrive at the depreciated improvement value EXCEPT:
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