How to Buy or Sell a Property with an ADU (or ADU Potential)

Many homeowners in the ADU Case Studies Project already owned a piece of property and decided to add a second dwelling for a good number of very good reasons. However, several homeowners specifically went looking for a piece of property with ADU potential. To learn more about each of their stories, please take a peek at these posts:

• Lesa Dixon-Gray’s ADU: Putting Mom in a Home, Sweet Home
• John & Stephani Hayden: An Expertly Executed Basement Conversion
• Susan Eliot’s ADU: Two Stories & A Mezzanine Office
• Tatiana & Rafael Xenelis-Mendoza’s ADU: A Hidden Gem
• James Michelinie & Kyra Routon’s ADU: A Starter Home
• Amanda Punton & Das Chapin’s ADU: Starting in the ADU

When it comes time to buy or sell a property with an ADU (or ADU potential), there are a few important things you should know. I’ve drawn on the expertise of ADU aware Realtors in Portland, OR to identify some key considerations for each step: selecting a realtor, searching for a property, and listing your house with an ADU.

Step #1: Find an ADU Aware Realtor

If you are looking to buy a home with an ADU or ADU potential, having an ADU-aware realtor on your team is going to be hugely advantageous for you. Working with someone who knows what to look for, and knows how to find it, will save you a great deal of time and money. Your realtor is the professional interface between you and the housing market.

Kol Peterson and Earth Advantage have a Certified ADU Specialist Broker education program. Ask your realtor if they have taken the class or check out the list of Certified ADU Specialists to find your realtor. If not, you’ll want to make sure they have a copy of Portland’s ADU Guidelines.

Here’s what Annie Rose Shapero and Liz Getty of Urban Nest Realty recommend as you’re selecting your realtor:

Annie Rose Shapero, Urban Nest Realty

As realtors, it’s our job to use our skills and expertise to help you find – and get – your dream home. If you want an ADU, you are going to have a much easier time with a real estate broker who has experience buying, selling, finding, or building ADUs.

As an example of what an ADU realtor can do, we want to tell you all a little secret about ADUs in Portland. People have been building them for a long, long time, and they don’t always get permits for them, and their realtors don’t always know how to properly market them so that you and your realtor can easily find them. If you can find a property that already has a separated space with a bathroom and kitchen area, you are well on your way to having an ADU, and at a much cheaper price point than building it out from scratch entirely on your own.

We recently did an extensive search of the RMLS looking for properties that were “secret ADUs” and came up with over 100 listings for the Portland area. It took us three hours to go through our initial search and identify those listings! Ask your realtor to do an RMLS search of the public and private comments for The Many and Confusing Synonyms for ADUs.

We at Team Tiny (Annie Rose Shapero and Liz Getty with Urban Nest Realty)  specialize in ADUs, Tiny Houses on Wheels, Small Developments, Aging in Place, Building Small, Building Green, and Community Financing.We’re always available to help. Feel free to get in touch with us for any questions, or if you have an established realtor relationship have them reach out to us.

Liz  Getty, Urban Nest Realty

Step #2: Find A Property with ADU Potential

As you and your realtor begin looking at homes with ADU potential, you should understand what to look for and what the dealbreakers are so that you don’t fall in love with a property only to discover it’s not feasible to put an ADU on that property.

Keep an open mind as you explore because in addition to the basement and garage conversions and backyard cottages there are at least 10 Creative ADU Types – and probably more!

Here are a few key points to keep in mind from Rambo Halpern, “The Bungalow Guy” as you look for a property with an ADU (or ADU Potential). (You can read all about Rambo Halpern’s ADU: A New Old-Fashioned Carriage House and contact Rambo if you’d like to work with him).

Rambo Halpern, “The Bungalow Guy“

Zoning: In Portland zoning is not as critical as one might think since ADUs are allowed on almost all single-family residential lots. [Learn more at How Portland Became ADU-Friendly (And How Your City Can, Too)].

Location of Existing Structures: An important factor is the location of the existing home on the lot (site plan).  You want to find a home that is ideally situated towards the front of the lot (smaller front yard larger back yard) and to one side of the lot.  This will allow the maximum space for building a detached ADU and also allowing access to the unit as well as parking for the main house.

Alleys: Another great feature of a property would be an alley at the rear of the lot. Various neighborhoods in Portland have homes with paved or unpaved alleys behind the homes which allow for building an ADU that faces the alley and has its own private access.

Basements: If you are considering adding an ADU in the basement of an existing home, the most important considerations would be the ceiling height and exterior access. Another thing to consider is the level of the grade (ground surrounding home) in relation to the basement.  Some basement are completely below grade (underground) and this makes them more prone to water intrusion and also makes adding egress windows and exterior doors much more difficult and expensive. A “daylight basement” which has a door leading directly outside the home is a great option to allow maximum privacy between the main house and the ADU. Finding a home where more of the basement is above grade will give you more natural light and be easier to convert to and ADU.

Realtor Tatiana Xenelis-Mendoza of Stepping Stone Realty also recommends that you consider basement to ADU conversions as she did for her ADU. (You can read about the challenges she faced – and her unique solution – in her case study: Tatiana & Rafael Xenelis-Mendoza’s ADU: A Hidden Gem and contact Tatiana if you’d like to work with her.)

Tatiana Xenelis-Medoza, Stepping Stone Realty

Basements: Consider homes with basements because basement conversions may be less costly and easier to manage than a detached ADU structure – either new construction or a garage conversion. You can read more of Tatiana’s Tips for Basement to ADU Conversions.

Corner Lots: Homes that are located on corners may be easier to navigate the zoning procedure since the City of Portland allows increased density in R5-R20 zones on corner lots (attached housing/duplexes). Also, corners give you two separate entrance options for your ADU: one at the front of the house along the side yard/driveway or on the side street through the backyard.

Basement Conversions: Code for basement conversions into livable space is 6′-8” so look for basements where the ceiling height, measured to the ceiling joints, is at least 6’10”. More than this height will give you ample room for ceiling Sheetrock. Look for houses with basements with already established separate entrances. If you find the right house but it doesn’t have a separate entrance, you can always build one. Also, look for houses where you have at least 5′ set-back from your property line. This allows for ample space to build your basement egress windows.

Garage Conversions: When considering a garage conversion, look for oversized garages, or those with attic or loft spaces. Also it will make your permit process easier if you have the minimum required set-backs around the garage.

Step #3: Sell Your Home with An ADU

Your ADU may be your “forever home” and you may plan to keep the property in the family. (Check out ADUs for Multigenerational Families for more on that!) Or you may plan to Own Two, Rent Both. Or you may want to keep your ADU as a Landlord Suite while you gallivant around the world. But chances are that at some point, you’ll want to sell your home with an ADU.

Here are some tips from Pam at YogaBug Real Estate on listing your property with an ADU:

Pam Blair, YogaBug Real Estate

Inform the prospective buyers of any potential or actual rental income from the ADU. If it is currently rented, what is the current rent and is there a lease in place? What are the terms of that lease? If it is not currently rented, research the potential rental income for the property. Potential rental income is a desirable characteristic to offset mortgages in a market where prices are rising.

Include an architectural diagram or floorplan and as many pictures of the ADU as possible in the RMLS. Help people visualize how they would use the space!

Have answers to important questions readily available to buyers:

• Is the ADU a fully permitted, legal ADU?
• Are all permits finalized?

Due to the 2015 tax implications on recently built detached ADUs, disclose current property taxes as well as whether the taxes have been reassessed since the completion of construction.

List whether the ADU utilities are separate from the main house.

Use words like “ADU,” “income potential,” “many possible uses,” studio” in your property description. Buyers search for these words and this way they can find your special feature home!

Hire a real estate agent who knows the ins-and-outs of the ADU market. This will facilitate a smooth, successful experience and help you to avoid any undesirable surprises during or after the transaction. For more expert guidance on listing your home with an ADU, contact Pam and Bruce at YogaBug.

About linamenard

Hi. My name is Lina Menard and I'm a small house dweller, designer, blogger, and builder. I'm currently collecting ADU Case Studies for AccessoryDwellings.org. Through my company Niche Consulting LLC, I help people design and build the home (and life) of their dreams! I also tell my stories about simple living in small spaces - like a travel trailer, a yurt, a backyard cottage, and tiny houses on wheels - at Niche News.

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