Where Does Finished Basements Count As GLA?

[hastalavista]

I've already stated that you can go ahead and call it GLA so long as you explain what it is. See the posts above.

You did say that and I lumped your and Mike G's statement together; I shouldn't have and I apologize for doing so.

Now, where is Garrett!!!

 

[Stone]

You did say that and I lumped your and Mike G's statement together; I shouldn't have and I apologize for doing so.

Now, where is Garrett!!!

No worries. I didn't say it right at first and lumped my thoughts about GLA and above/below grade together which is why I had to reply to David. No apology necessary.

 

[gregb]

Someone should start a flight magazine for regional airlines titled "Basement Living" in order to educate folks in the west that they are living "below grade" in a cave-like dwelling.

 

[Stone]

Someone should start a flight magazine for regional airlines titled "Basement Living" in order to educate folks in the west that they are living "below grade" in a cave-like dwelling.

Yes, because that is exactly what has been said. And, only folks in the west have hills or mountains and houses built into either.

Find a definition of above grade that meets what is in the photos and I'll reconsider.

 

[redfish]

In instances when basement as GLA questions arise they usually come from a market participant or agent, "does my finished basement count towards living area", when queried I explain why I will not include the finished basement area in the GLA. I then also explain that it is a moot point because either way, finished basement area, unfinished basement area or above grade living area, would be consistently reported and considered in the appraisal report in the same manner for the market data.

 

[CindyR]

[QUOTE="
Find a definition of above grade that meets what is in the photos and I'll reconsider.[/QUOTE]

Here's the Fannie definition - specifically talks about Gregb's pictures. Yes you can include it in GLA but it is still below grade. Really - if there is no exterior wall back there then it is 'below grade' in the back and therefore the entire first level is not 'above grade'.

Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area. Fannie Mae considers 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 & Finished Rooms Below-Grade line in the Sales Comparison Approach adjustment grid.

For consistency in the sales comparison analysis, the appraiser should compare above-grade areas to above-grade areas and below-grade areas to below-grade areas. The appraiser may need to deviate from this approach if the style of the subject property or any of the comparables does not lend itself to such comparisons. For example, a property built into the side of a hill where the lower level is significantly out of ground, the interior finish is equal throughout the house, and the flow and function of the layout is accepted by the local market, may require the gross living area to include both levels. However, in such instances, the appraiser must be consistent throughout the appraisal in his or her analysis and explain the reason for the deviation, clearly describing the comparisons that were made.

 

[Elliott]

When does basement become living area?

When the house is turned upside down.

 

[KeyWhiz]

I have done a number of these. I count the sf as above grade GLA. Never had problem.

We have a lot of these here as well. It's all over the map as to how the county assessors and realtors call the spaces around here. Personally, I've gone back and forth over how best to call these things over the years and have decided it's best to take them on a case by case basis.

I've never ran into any real problems calling the space however I wish to call it on a report, other than occasionally an underwriter will want more explanation or maybe ask I move this or that to another line on the report.

Ultimately, I think it comes down to a matter of form and function. Technically, the room I am typing this from within my own home is "below grade". Or, at least the back few feet of it, as my house it built into a hill. The front door is on the lower level which leads straight back into this room which is in the hill. Above me is the kitchen which has a back door that leads to a patio that is on the hill. The form and function of the home is one living area. You have no sense whatsoever that the front door leads to a "basement" or that at any time do you feel like you're sitting "below grade". But my home looks like a two story home from the front, and like a one story home from the back.

The county calls it all GLA (except for a small 168 sf utility room that is unfinished and also below grade. It calls THAT the 'basement' even though it is not more 'below grade' than is my office space.) The appraisers that have appraised this home over the years all call it all above grade GLA.

If I were appraising the house and some underwriter wanted to get technical and ask me to put the hundred square feet or so of this house that is below grade on another line, I could do that. But it'd just be a reporting function that would create an uglier report with unnecessary adjustments, IMO. I'd still be comparing it other houses of the same size without anything below grade because the fact that some of it is below grade does nothing to change the value.

The biggest annoyance I run into with underwriters on this stuff seems to be what to do about bedrooms and baths. If I've got a house with a finished basement that functions as part of the GLA with a combined 4 bedroom/3 bath count, then I'm going to be looking for homes with similar living space and room count. If I can find one with a similar finished basement, great. But if not, I'll compare to homes with the same GLA and room count all above grade because that's what the buyers in the market would do.

So if I separate out the below grade stuff on another line, the underwriters get upset that now I've maybe got across-the-board adjustments for room count on both the above - grade and below -grade lines. Even though they add up and cancel each other out. But put it all on one line, and now they are upset that I didn't separate out the below -grade stuff.

So it's a lose/lose sometimes in that regard.

 

[KenAZ]

Those from the East or Midwest have no idea how we deal with basement in Phoenix. It i a completely different market. Basements are expensive to build due to the hard soil. Most people prefer a basement due to less energy to cool. Basements are the same if not more desirable than GLA. County and MLS considered finished basements to be livable.

My FNMA insider tells me that local FNMA reviewers will accept an appraisal that includes basement as GLA. Unfortunately they will not provide a memo, so we are stuck. We have to guess the area of the basement on comps or actually knock on the door and physically measure it. Sometimes we get lucky and can get the basement measurements on county records.

 

[CindyR]

Most people prefer a basement due to less energy to cool. Basements are the same if not more desirable than GLA. County and MLS considered finished basements to be livable.
.

I think you might be seriously exaggerating that 'most' people prefer a basement. If most or lots or even some people preferred basements there would be a heck of a lot more of them. Of the approximately 6,000 homes I have appraised in the Phoenix market area less than 1% have had basements.

And generally the realtors can give you an estimate of below grade area and rooms included down there.