We were asked about an Oakland property today with three bedrooms and one bath upstairs (permitted), and three bedrooms and one bath downstairs (un-permitted).
The issue is this: The Oakland market gives tremendous value to un-permitted space, but appraisers are usually not allowed to. So getting the property to appraise will be difficult.
Appraisers have to use three bedroom/one bath comparable sales, and only give marginal value to the un-permitted space.
The only way appraisers can attribute full market value to the un-permitted space is when they can find comparable sales with similar permitted room counts and similar un-permitted room counts. In tract neighborhoods, it is very difficult to find such comps, but in non-conforming areas like Oakland, such comps sometimes pop up (but cannot be counted on).
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