Owners often ask: will my ADU add as much value as it cost? No government source gives a Los Angeles answer, and we do not repeat dollar figures we cannot trace to a named, dated source. This guide explains who values an ADU, how each one does it, and what you can do to help the unit count.
LA ADU Guide is an information site. We are not appraisers, lenders or tax advisors. Confirm details with your lender, an appraiser and the LA County Assessor.
Three different values
An ADU can have three separate values. They rarely match.
| Value | Who decides | What it is used for |
|---|---|---|
| Appraised (market) value | A licensed appraiser, for a lender or a sale | Loan amounts, refinancing, selling |
| Cost to build | Your contractor's invoices | Your budget and tax records |
| Assessed value | LA County Assessor | Your property tax bill |
A unit can cost more to build than an appraiser adds to the value. It can also be assessed at a figure that differs from both. Do not assume one number predicts the others.
How an appraiser looks at an ADU
Appraisers generally compare your property with recent nearby sales. The hard part is finding sales that match. Many neighborhoods have few sales of homes with a comparable ADU. When comparables are scarce, appraisers may use other methods, such as adjusting for the rental income a unit could earn or the cost to replace it. Ask any appraiser which method they plan to use.
Things that tend to affect how a unit is counted:
- Permitted or not. A unit with a final inspection and certificate of occupancy is on firmer ground than one built without a permit. See the ADU permit process in Los Angeles.
- Own entrance, kitchen and bathroom. A unit that works as a separate home is easier to describe than one that does not.
- Quality and condition. Finishes, layout and age.
- Location and lot. Privacy, parking and how the unit sits relative to the main house.
- Whether it can be rented. See rental income and property tax.
We did not find an official rule that tells appraisers how to value ADUs, so treat the list above as general practice, not a requirement.
Appraisal for a loan
If you borrow for the build, the lender may ask for an appraisal based on the value after completion. That appraisal uses your plans and budget because the unit does not exist yet. Ask the lender:
- Will you appraise as-is or after completion?
- Does the appraiser use plans, or wait for a finished unit?
- Will projected rent count?
- What happens if the finished appraisal comes in lower?
See ADU construction loan vs HELOC and ADU financing options.
Appraisal for a sale
A buyer's lender will order its own appraisal. A permitted ADU with documents is easier to explain. Selling the ADU on its own lot or as a separate unit has its own rules. See selling an ADU separately under AB 1033.
Property tax value is a separate step
California's Proposition 13 sets your assessed value at purchase. The Board of Equalization says new construction is generally added at its value when completed. Your base value for the main house generally stays in place. The Assessor decides the ADU's value.
A 2024 bill, SB 1164, would have excluded ADU construction from reassessment for up to 10 years. We could not confirm that it became law. Do not assume it applies. Ask the Assessor. Details are in rental income and property tax.
What to keep on file
- [ ] Permit, final inspection sign-off and certificate of occupancy
- [ ] Plans and as-built drawings
- [ ] Contract, change orders and every invoice
- [ ] Photos before, during and after
- [ ] A list of finishes and appliances
- [ ] Any rental agreement and rent records
- [ ] Assessor notices
How to use this
- Do not count on a specific dollar gain. Plan the budget so it works even if the appraisal is modest.
- Ask two or more lenders how they treat ADUs before you build.
- Keep your paperwork together so an appraiser can see the unit is legal.
- Check the tax side with the Assessor.
Common questions
Does a bigger ADU always add more value? Not necessarily. Value depends on the local market, the quality and the legal status of the unit, not only on size.
Should I get an appraisal before I build? Some owners ask a lender or appraiser for an early opinion. Ask whether it is a formal appraisal or only an informal view, and whether it costs a fee. It is not a guarantee of the final number.
Will an unpermitted unit count? Appraisers and lenders often exclude or discount space without permits, and unpermitted work can cause problems at sale. Ask a lender how it treats it.
Does the ADU change my insurance? It can. Tell your insurer about the new structure and ask how it is covered and rated.
Who can help? A licensed appraiser can explain how a unit is valued. The Assessor can explain the tax side. A lender can explain loan treatment.
What to remember
- Appraised, cost and assessed values are three different numbers.
- A permitted unit with records is easier to value.
- No official source we found gives an average value gain for Los Angeles.
See the ADU financing hub for related guides.