1. Welcome to AppraisersForum.com, the premiere online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Once a Basement, always a basement? Maybe Not.

Discussion in 'Urgent - Help Needed' started by celilola, Dec 18, 2012.

Thread Status:
Not open for further replies.
  1. celilola

    celilola Sophomore Member

    0
    Jan 9, 2011
    Professional Status:
    Certified Residential Appraiser
    State:
    Arizona
    The subjects above ground GLA contains two bedrooms and one bathroom. The lower level, a partially finished basement, contains a game room and three bedrooms. Due to rolling and sloped topography in the area, basements are not necessarily uncommon. The typical basement, however, in the subject community is usually finished, and most often used as everyday living area by the typical owner. The subjects basement is only partially finished (still having brick and wood paneled walls, indoor/outdoor carpeting, etc). The basement is a footprint of the upper level.

    COUNTY ASSESSOR'S field card says the subjects basement is the "lower level" and counts/taxes it as Above Ground Living Area. The lower level, however, does have walls below grade and partially finished, as noted above.

    Long story, not so short...the owners are "appealing" because of the difference between me and county.
    I know the county is wrong, maybe its getting late, or maybe I'm just getting old, but I just cant find an actual above ground GLA or basement definition and wondering for some input...to satisfy a silly homeowner. Thanks in advance.
     
  2. ScottSigmund

    ScottSigmund New Member

    0
    Mar 20, 2006
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Basement Help

    This issue comes up a lot here in Indianapolis where there are a lot of Raised-ranch and split-level ranch (tri-level) type homes. Here is the Fannie Mae Guideline that I reference in all reports for these types of homes:

    Fannie guidelines
    XI, 405.05: Gross Living Area (11/01/05)
    The most common comparison for one-family properties (including units in PUD, condominium, or cooperative projects) is above-grade gross living area. The appraiser must be consistent when he or she calculates and reports the finished above-grade room count and the square feet of gross living area that is above-grade. For units in condominium or cooperative projects, the appraiser should use interior perimeter unit dimensions to calculate the gross living area. In all other instances, the appraiser should use the exterior building dimensions per floor to calculate the above-grade gross living area of a property. Only finished above-grade areas should be used—garages and basements (including those that are partially above-grade) should not be included. We consider a level to be below-grade if any portion of it is below-grade—regardless of the quality of its “finish” or the window area of any room. Therefore, a walk-out basement with finished rooms would not be included in the above-grade room count.
    Rooms that are not included in the above-grade room count may add substantially to the value of a property—particularly when the quality of the “finish” is high. For that reason, the appraiser should report the basement or other partially below-grade areas separately and make appropriate adjustments for them on the “basement and finished areas below-grade” line in the “sales comparison analysis” grid. To ensure consistency in the sales comparison analysis, the appraiser generally should compare above-grade areas to above-grade areas and below-grade areas to below-grade areas. The appraiser may deviate from this approach if the style of the subject property or any of the comparables does not lend itself to such comparisons. However, in such instances, he or she must explain the reason for the deviation and clearly describe the comparisons that were made.


    You are correct. Any level that is even partially below grade is basement area. Most tax reports (at least here in Indy) characterise the sizes of these homes incorrectly as do most realtors.

    You can google "Fannie guidelines XI 405.05" to get a couple of good explainations.

    Hope this helps!
     
  3. Mike Kennedy

    Mike Kennedy Elite Member

    122
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    Check the Governing Municipality's Building Ordinance to see if they utilize ANSI Standards (adherence is entirely voluntary).
     
  4. JTip

    JTip Senior Member

    109
    Oct 12, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Pennsylvania
    One county's assessment office does that around here. Split level/bi-level homes are taxed on the total building area, both 1st floor and basement, so instead of 1,200 s.f. the card shows and is taxed on 2,400 s.f.

    A canned comment explaining why I only use 1,200 s.f. (or whatever gla they are) along with similar style homes with the 'wrong' gla (per county records) corrected to 'my' gla works everytime. Just explain it.
     
  5. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    342
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    They should be appealing their valuatin to the assessor to get taxes lowered, not appealing your correct description of the GLA.

    Scott references the best answer - good work Scott and welcome to the forum
     
  6. Kim Whiting

    Kim Whiting Senior Member

    11
    Feb 17, 2003
    Professional Status:
    Licensed Appraiser
    State:
    Michigan
    If it ain't the realtors counting below grade as above grade it's the assessors.......I just do what the above indicated.....any part of the lower level touching soil.......you're basement.....funny thing is....many owners get so bent out of shape when you call an area basement.....like it's the death nell or something....heck, you get credit for it if it's finished half way decent.....
     
  7. Mike Kennedy

    Mike Kennedy Elite Member

    122
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York

    The Leprechauns surmise that typically, after spending a half hour or so writing the diatribe above emphatically stating DO NOT INCLUDE BASEMENTS IN GLA, someone reviewed the draft with their Boss who said - WHAT ARE YOU NUTS????? :Eyecrazy: YOU'RE GONNA GET US BOTH FIRED - HERE..........STICK THIS SENTENCE IN THERE - LET THE APPRAISERS STAND UP FOR THEMSELVES!. :new_littleangel:

    The F&F Fairie Angel
    "NO NO NO NO NO NO NO NO NO well okay go ahead we know ya need the extra sf to hit the Bull$eye and WE NEED TA BUY LOANS - so fine go ahead - it's your neck on the chopping block - not mineeeeeeeeeee"
     
  8. Mike Kennedy

    Mike Kennedy Elite Member

    122
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    Side Note: having discussed the new phenomena with 20-30 local, seasoned Assessors back in 2002 - their common position statement on this issue (paraphrased)>

    "YOU know it's not GLA, the owners know it's not GLA, but.........THEY ARE BEGINNING TO LIST HOMES WITH FINISHED BASEMENTS ADDED IN - SOOOOOOO if they are listing em that way - and selling them that way - and the sale price reflects the bogus GLA - well helll..........I'm gonna TAX em that way too! IF buyers / owners have a problem they can grieve. Wanna point the finger - I'll just point it where it belongs - the person who SOLD you the damned house."

    BAMMMMMMMMMMM... overnite 1,000sf (and larger) one story ranches and raised ranches, and 1 story split levels with partial or fully below grade homes became 1500-2000sf+ homes at $100-200 per square foot. Once they saw they got away with it, some daring entrepreneurial home marketers proceeded to combo above and below grade areas in OTHER style homes as well!! (not to mention illegal additions and illegal converted garages).

    Thus, the 2003 Bubble was created. The $$$ gains 2003-2006/7/8 were never real. In many markets the current MV level post-bubble burst are back to 2002-3 levels. Go figure.
     
  9. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    342
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
    I ignore both...

    I've analyzed a ton of houses with walk out finished basements and the $/SF of the combined basement and GLA is invariably well below the $/SF of a single floor or 2 sty house without basement. That's my story and I'm sticking to it.

    Fannie mae placed that little caveat in the description for some apparent reason but no one really knows why... but it is a trap that fannie created and is now claming down on all those dumdums back there that

    But during the period 1998-2008, how many of us talked with appraisers who were asking questions about "giving" more value to a property because their values would otherwise be "too low" ... ie.- they didn't hit the contract price, or the list price or the bankers expectations.
     
  10. sputnam

    sputnam Senior Member

    0
    Apr 24, 2012
    Professional Status:
    Certified General Appraiser
    State:
    North Carolina
    If it's below ground at all, it's a basement. However, whether someone calls it a basement (or lower level or GLA), makes no difference to the actual market value of the property.

    One approach that is used sometimes, is to describe the improvements in line with appraisal standards on the 1st page of the report, then report the SF in line with local market conventions on the grid. Just make sure you clearly explain what you did and why. I've done this many times...in my market, it's a common issue for split level designs...and never had anyone question the validity of my approach.
     
Thread Status:
Not open for further replies.

Share This Page