How an ADU Can Add Value to Your Utah Home

A legal, permitted ADU can add real value to a Utah home, but no rule hands you a set number. An appraiser measures it against recent nearby sales of similar homes that also have an ADU. If buyers in your area don't offer more for one, it may add little or nothing. Permits, quality, and local demand decide the answer.

Last week we covered Utah's new ADU rules and how to finance an ADU. Today: what one is worth.

Does an ADU automatically raise my home's value?

No. Freddie Mac, one of the two big government-sponsored mortgage buyers, tells appraisers they can't ignore an ADU. It also says that if local sales show no market reaction to ADUs, the appraiser may give it no value.

What you spent isn't the test either. Fannie Mae won't accept an appraisal that relies only on the cost to build. Value is what a buyer would offer today.

A Federal Housing Finance Agency review found appraised values grew faster for California homes with ADUs, but said the reasons need more study. California isn't Utah. Your neighborhood's sales are the evidence that counts.

How does an appraiser value an ADU?

The appraisal is a licensed appraiser's opinion of what the home is worth. When there's an ADU, Fannie Mae, Freddie Mac, and FHA guidelines ask the appraiser to:

• Report it separately. A detached ADU's square footage isn't added to the main home's.
• Find comparable sales. If the ADU meets zoning, Freddie Mac requires at least one comparable sale with an ADU. If there's no recent one, the appraiser can use an older sale or one from a competing neighborhood.
• Show market acceptance. FHA asks the appraiser to summarize how the market accepts the ADU and state whether it can be legally rented without restrictions.

Does rental income count toward value?

Indirectly. Fannie Mae requires the income approach, which values a property by the rent it can earn, only for two- to four-unit properties. On a single-family home with an ADU, it may fit where there's a strong rental market, but never as the only method. Comparable sales carry the weight.

Rent still matters to buyers. As we covered Friday, rent from a legal ADU can sometimes help them qualify.

What happens to value if the ADU isn't permitted?

It can shrink both your value and your buyer pool.

• For additions without required permits, Fannie Mae has the appraiser comment on the quality of the work and its effect on value.
• If zoning doesn't allow the ADU at all, Fannie Mae and Freddie Mac require, among other conditions, at least two comparable sales with the same non-compliant use.
• FHA requires the ADU to comply with zoning, and Freddie Mac won't count rent from an illegal ADU.

Fewer loan options mean fewer buyers. Utah's standard seller disclosure form also asks about additions, whether permits were issued and closed, and whether a rental use complies with zoning. If your unit was never permitted, ask your city what it would take to bring it into compliance before you list.

Who wants to buy a home with an ADU?

In the National Association of Realtors' 2025 Profile of Home Buyers and Sellers, 14% of buyers nationwide bought a multigenerational home. The top reason was caring for aging parents. A backyard unit gives grandparents, adult children, or a caregiver a front door of their own.

Will S.B. 284 change ADU values in Utah?

Over time, it should help. S.B. 284 opens the door to more detached ADUs in larger Utah cities. As more get built and sold, appraisers should have more comparable sales to work with. More ADUs also means more competition, so quality, privacy, and design will matter more.

Will an ADU raise my property taxes?

It can. The Salt Lake County Assessor values property as it existed on January 1 each year, based on market sales. If your ADU raises your home's market value, your assessed value can rise with it. Ask the Assessor how your unit will be treated.

What should I do if I'm keeping, upgrading, or selling?

• Keeping your home: A legal ADU can serve your family now and support value later. Keep plans, permits, and final inspection records in one folder.
• Upgrading: A home with a legal ADU, or a lot that qualifies for one, can give a growing household room without buying two properties.
• Selling: Ask that your home be priced against sales of homes with ADUs, not just homes without them. Have permits and any lease ready.

What's a simple next step?

Before you build or list, ask for a comparable-sales review of homes with ADUs in your neighborhood.

To see whether your property might qualify for an ADU, download our Gomez Rueda Realty Group ADU Guide 2026. Thinking about selling? Pick the how-to-sell guide on our GR Homes guides page. If you'd rather talk it through, we're here.

FAQ

How much value does an ADU add in Utah? There's no set figure. It depends on nearby sales of homes with ADUs, permits, and quality.

Can an unpermitted ADU hurt my sale? Yes. It can lower value and limit which loans a buyer can use.

Will an ADU raise my property taxes? It can, if it raises your home's market value.