The Right Way to Build and Sell ADUs

Homeowners, contractors, and architects can responsibly undertake an ADU project by being knowledgeable and interested in being successful.

Whether you are a contractor, a homeowner, or an architect, the process of designing and building an Accessory Dwelling Unit (ADU) is very appealing and could result in a significant increase in the number of ADUs that are created using the principles of green building.

Part of an ADU’s appeal is the fact that it is smaller and therefore might be “simpler” to undertake. Some people might believe that a smaller building will automatically translate into a project that requires less attention to design, selections, project management and financial management, than a larger, “more complicated” residential project.

It also seems possible that being involved with an ADU or ADUs will be a lucrative market to approach for contractors and for homeowners wishing to increase the value of their real estate.

One important issue that can be overlooked is that some ADU projects require significant time, and in some cases, an effort more similar to a larger-scale residential project. The reality is that an ADU can have the complexity of any home design project but just result in a smaller structure.

Many components of an ADU match those of a large home project. It is actually easy to understand why that is the case. ADUs require roofs, walls, windows, doors, floors, intelligent selection of products that include a bathroom and a kitchen, and can also be required to exhibit the management and the proper decision-making and selection of an entire home—just resulting in a smaller building.

Thinking that there will be less concern about details, decisions and selections—and that it will be much easier to create an ADU—may not be the reality. ADUs are evolving to recognize the reality and responsibilities of entering the ADU market. ADUs do lend themselves to being the perfect projects to formalize residential building into a well-organized approach to planning, design, and execution of residential design and building.

Homeowners, contractors, and architects need to proceed with caution, of course, but they also need to responsibly undertake an ADU project by being knowledgeable and interested in being successful. This does not happen by accident.

California Is Leading the Way Regarding ADUs

It’s a recognized statement: “California is running into the problems that ADU projects can have.” Everyone can learn from this, and it’s of great value to those considering approaching the ADU market with high (and possibly unrealistic) expectations.

While ADUs are a great opportunity, some construction companies have already gotten into serious difficulties. We can learn from what can go wrong. Over-promising, over-extending one’s abilities to deliver, and failing to successfully address and meet the demands of being involved in the ADU market are some of the outstanding problems that have occurred in California and have already been widely reported.

Misperception: The Government Has Simplified the Review and Approval Process

This is another area where there is a difference between perception and reality regarding the ADU market. One misconception in some locations is “that somehow regulations have relaxed for ADUs,” that “pre-approved plans” are available, and that one can immediately get approval for a project and start building. This makes it seem that the front-end design and approval effort has been reduced or eliminated. But builders are finding that “pre-approved ADU plans” in some locations may not be revised.

Also, the project may be moved into the regular review and approval process (which takes much longer to go through) if any changes to the pre-approved plan are made. This can result in extensive additional review and approval time than planned or expected.

Any anticipated gains expected from using pre-approved plans may be lost if your client wants to do any custom project elements that a homeowner requested. If you are trying to meet the needs of a specific client, they’re not always going to be satisfied with the pre-approved plans exactly as they exist. Check with your local review and approval agency before proceeding.

Things We Can Do

There are ideas being explored to address reasonable approaches to ADUs:

• Use available technology to specifically address the design and construction of ADUs that make them more manageable, better organized and more efficient for homeowners, architects, general contractors and subcontractors.
• Incorporate clear data to homeowners regarding the Total Cost of Ownership (TCO).
• Provide well-organized information regarding realistic costs of real estate, financing, architecture, engineering, government review and approvals, construction, product and materials selection, building maintenance and management.

Part of an ADU’s appeal is its small size, which could—but not always—make for an easier-to-design, faster-to-build project.

Helping Homeowners Not Make Mistakes

Many firms are exploring innovative ways of coaching and guiding the “decision making/selection/choice” process that can guide homeowners toward creating the ADU for their property. Still, many homeowners may erroneously think that because it is a small project, they can successfully manage it on their own. Very few homeowners will actually be capable of this.

We’ve all seen projects where homeowners overestimate their abilities, and the time required to undertake their own kitchen or bathroom remodeling. They also underestimate the difficulty in doing so and end up with a project that takes much longer, costs much more, and that turns into a less-than-satisfying undertaking. This can easily happen with an ADU project.

The other error a homeowner may make is to underestimate what a reasonable bid would be for a contractor to manage an ADU project. As many of us know, the “lowest bidder” factor often results in a homeowner ending up with someone who has “underbid the project and ends up taking longer and charging more than their bid on what the project was originally estimated to be.”

We’ve all experienced that in the building Industry and that can be a factor in the ADU market as well. Reliable information, reliable project participants and informed homeowners will determine how these factors play out in the ADU market. It will take all three coming together for each project to stay on track—just like every other building type.

The other obvious element in considering the ADU market is how to apply all of the sustainable/green building data available to ADUs from the beginning—which Green Builder magazine has been providing for years—to the residential building market, revised now and oriented specifically to ADUs.

For now, seriously consider applying all or much of the information that Green Builder magazine regularly supplies you, regarding the green, sustainable aspects of residential building to your ADU practice. This will really contribute to improving the world through Green Builder, if every ADU is “green.” It will be an appealing aspect of your work, and your ADUs will have an advantage over other builders, who are not featuring sustainability and green building in their ADUs.