Simultaneous to that, negotiate price reductions to the greatest extent possible because of this extra cost you are incurring. 

@Ricardo P. Ill

Unless the seller has to be immediately out of the mortgage I see sub-to as an excellent cost reduction strategy. just reading between the lines.. but if the bank says they will take 91k for it sounds like the mortgage is in default so a sub to might not be possible.

Not sure where you are looking but we have seen a 25% reduction in pricing this year.

Do they have insurance and property tax reduction reports in their study?

I see price reductions daily.

I maintain even break even on valuation (which is rare in SF Zoned areas), the ADU has big disadvantages versus new property acquisition including financing, level of effort, rent control, prop tax being based on cost rather than value added, length of time including length of time from first expenditures to first income, reduction of something from existing unit (in your case existing home lost its garage).Did you see starting next year Mf can add an ADU per unit up to 8 units without any affordable housing concessions?

May see some slight reductions but we are most likely not going from say 7% to 5.5% unless of a major economic crisis which would also cause home prices to get hit.

You likely are not going to get a reduction in your taxes.

They may also require US credit history, although there are a handful that will not require a US credit report for an increased rate/ reduction in LTV.