How Should You Price a Mar Vista Property With a House and a Back Unit?

Price it from what the record says the property is, not from how it looks from the driveway. A house with a permitted back unit, a legal two-unit property and a house with an unpermitted unit behind it can look the same from the sidewalk. They get appraised differently, financed differently and bought by different people, so each one has its own price.

That means three facts come before any number: what the city says is on the lot, whether rent rules reach either building, and who is most likely to buy it. Once those are settled, I run the price more than one way and see where the answers meet. Here is how that works on a Mar Vista lot with two homes on it.

People use "back house" for several different things. For pricing, there are three that matter.

• A house with a permitted accessory dwelling unit. One main home, plus a smaller legal unit on the same lot.
• A legal two-unit property. Two dwellings on the city's records as two units, whether they are built as a duplex or as a front house and a back house.
• A house with an unpermitted unit. Someone lives there, or could, but the records do not match what is standing.

Do not settle this from memory or from what the last owner told you. Pull the parcel on the city's ZIMAS lookup, then go through the permit history for your Mar Vista home. You want the permit and certificate of occupancy for each building, and the year each one was built. Those dates matter again in a moment.

Many buyers using a conventional loan will bring an appraiser, and Fannie Mae's Selling Guide shapes how that appraiser works. A few of its rules change how you should think about your number.

• The appraiser decides what the property is. Whether it counts as a one-unit home with an accessory unit or as a two-to-four-unit property depends on its characteristics. The guide points to things like separate utility meters, a unique postal address, and whether the unit can legally be rented.
• A unit has to be a real unit. The guide looks for its own way in and out, a kitchen, a sleeping area and bathroom facilities. The kitchen needs a stove or a stove hookup. A hotplate or a microwave does not count.
• A detached unit's square footage stays separate. Fannie Mae's appraisal guidance keeps a detached accessory unit's living area out of the main house's above-grade square footage.

The square footage point is where sellers get surprised. Adding the back unit to the house and multiplying by a price per square foot is not how an appraiser gets to value. The house gets compared as a house, and the unit is looked at as its own feature.

The rent can matter to the buyer's loan too. Under Fannie Mae's current policy, rent from one accessory unit can help a buyer qualify on a one-unit principal residence, up to 30 percent of their qualifying income. That can widen your buyer pool, but only when the unit and its income can be documented. Other loan types have their own rules, so your buyer's lender has the final word. For what happens when the value comes in low, read what an appraisal gap means when you sell.

Mar Vista is inside the City of Los Angeles, so the city's Rent Stabilization Ordinance is the next check. The Los Angeles Housing Department says the ordinance generally applies to rental units built on or before October 1, 1978, unless there is only one single family dwelling on the parcel.

That last part catches owners. A pre-1978 house standing alone is generally outside the ordinance. Add a second unit and that can change. The department's guidance says a completely detached accessory unit is generally not covered itself, but the older house may be, because there is now a second unit on the parcel. So the building you think of as the exempt one may be the one that is covered.

Why this reaches your price:

• A buyer who plans to live there wants to know whether they can move into the unit they want, and when. A covered tenancy limits that.
• An investor reads the rent you collect today and the rent the rules allow next year, and prices from there.
• A vacant unit and an occupied unit can draw different buyers at different prices, so a tenant in place belongs in the pricing conversation from day one.

I walked through how to check coverage in this article on the RSO and two-unit lots, and the same steps apply in Mar Vista. If a tenant is in place, read selling a tenant-occupied property too. Talk to a landlord-tenant attorney before anyone gives a notice.

You can still sell. You just price what you actually have, and you say so. California sellers have to disclose it, and this guide to unpermitted work explains how that plays out in a sale.

You have two honest paths.

1. Look at legalizing it first. Los Angeles Building and Safety has a path under Assembly Bill 2533 for some unpermitted accessory units and junior units built before January 1, 2020. Ask the department whether yours qualifies. A unit that is legalized can then be priced as a legal unit, so compare the cost and the work against what that does to your number.
2. Sell it as it is. Disclose it plainly and price it for a buyer who is taking on that question. The buyer's lender and appraiser will have their say, so expect questions.

Either way, the rent from an unpermitted unit is not a number to build your price on. A buyer may pay something for the space. Counting on it as income is a different thing.

Once the facts are settled, I do not pick one method. I run three and look at the gap between them.

1. As a house. Closed sales of comparable Mar Vista houses, matched on lot, size and condition, with the back unit treated as a separate feature.
2. As a lot with two homes. Closed sales with a similar second unit and the same legal status. A permitted unit is compared with permitted units. These are harder to find, so expect fewer of them and judge each one closely.
3. As an income property. What an investor would pay for the actual lease and the actual costs. This only counts when the rent is legal and documented.

Then the real question: who is most likely to buy this, and which of those three numbers do they care about? Someone planning to live in the front and rent the back reads it differently than someone who wants a home for a parent, or an investor reading the rent roll. The list price should speak to that buyer. For how I think about pricing in general, start with how to price a Westside home to sell.

One number to leave out: what the back unit cost to build. Buyers pay for what it does for them now, and that can be more or less than what you spent. The ADU rules and home value article goes further into what buyers ask.

• Permits and certificates of occupancy for both buildings
• The year each building was built
• Whether the utilities are separately metered, and the unit's address if it has one
• The current lease, the rent history and any notices, if a tenant is in place
• Rent registration records, if the ordinance applies
• A simple floor plan and measurements for each home

This same packet helps the appraiser, the buyer's lender and the buyer's agent. It also keeps the price conversation on facts.

Every property like this starts the same way with me. I see both homes, I read the records, and then we talk numbers. I handle the vendors, the paperwork and the questions from there. No pressure, just real answers.

If you own a house and a back unit in Mar Vista and want to know what it is really worth, get in touch. I'm here when you're ready. Call or text me at 310.708.7717.