Accessory dwelling units, or ADUs, are gaining popularity across many U.S. markets, and real estate professionals are increasingly fielding questions from buyers and sellers about these versatile spaces. Whether attached or detached, built above a garage, or converted from a basement, these units can add significant value to a property and create lifestyle options that appeal to a wide range of clients.

But with that opportunity comes complexity. Here’s what real estate agents should understand about ADUs and how to best advise clients who are buying or selling a home with one.

What Is an ADU?

Accessory dwelling units (ADUs) are often referred to by various names, including granny flats, in-law suites, guest cottages, or casitas. Regardless of the term, an ADU is defined as a self-contained residential unit located on the same lot as a single-family home. It includes a kitchen, bathroom, living area, and a separate entrance—and it typically shares utilities with the main house. 

While an ADU can increase the function and value of a property, it cannot be sold separately. The unit is considered an extension of the primary residence and is subject to local zoning laws and building codes.

How ADUs Are Used

ADUs serve a wide range of purposes:

– Multigenerational living: Perfect for aging parents who require proximity without full-time care, or for adult children returning home.

– Guest accommodations: Offers privacy and comfort for visitors without disrupting the household.

– Rental income: Many homeowners leverage ADUs for long- or short-term rental opportunities through platforms like Airbnb or VRBO, though this depends heavily on local ordinances.

– Home office or studio: Some homeowners repurpose ADUs for remote work, creative studios, or home-based businesses.

As a real estate agent, it is essential to understand and effectively communicate the intended use of an Accessory Dwelling Unit (ADU) and how it aligns with local zoning regulations, neighborhood covenants, and the client’s long-term objectives.

Key Considerations for Buyers

When representing buyers interested in a home with an existing ADU, or planning to build one, highlight the following:

– Zoning and local laws: Encourage buyers to research whether the municipality allows ADUs and, if so, under what conditions (e.g., occupancy restrictions, size limitations, rental rules).

– Use restrictions: Some cities require owner-occupancy for ADU rentals or limit short-term rental options altogether.

– Parking and access: Ensure there is adequate space for additional vehicles and a safe entry to the ADU.

– Insurance and financing: Not all lenders or insurers treat ADUs the same, so buyers should work with professionals familiar with these properties.

Agents can provide added value by connecting buyers with local resources, planning departments, or contractors who specialize in ADU development.

Tips for Sellers with an ADU

If your client is selling a home with an ADU, help them position the unit as a value-add:

– Market the versatility: Highlight the multiple potential uses—rental income, multi-generational living, or guest accommodations.

– Showcase the quality: Make sure the ADU is up to code and professionally presented, featuring high-quality finishes and a clear separation from the main home.

– Gather documentation: Buyers may request permits, construction plans, or income history if the ADU was used as a rental.

– Be honest about limitations: Communicate that the unit cannot be sold separately and is part of a single-family residence.

Guiding Clients Through the Building Process

If a client is considering adding an ADU, agents should encourage a thoughtful, research-based approach:

• Review zoning laws, HOA rules, and local building codes before commencing any work.
• Evaluate the space—inside the home, as a garage conversion, or a separate structure.
• Account for parking and access, especially if the ADU will have separate tenants.
• Confirm occupancy rules—some areas require that the primary home remain owner-occupied.
• Get builder recommendations, multiple bids, and confirm licenses, insurance, and bonding.
• Prepare for potential disruptions during construction, especially when building inside or near the primary residence.

As ADUs become more common, real estate agents who understand their potential and legal implications will be better equipped to guide clients confidently. Whether buying, selling, or considering a build, clients depend on your expertise to make informed decisions that align with both lifestyle and investment goals.

Stay informed on local trends and policies—and be the trusted advisor your clients need when it comes to the growing world of accessory dwelling units.

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