GLA Dilema For Bottom Floor

[Tom D]

the new townhouses that are being built in this old city have basements with a full or partial window well at the front & rear. many times there is a full bath, with the basement finish being equal to the rest of the house. now i count this as a finished basement because all the other older row homes have regular basements. i am lucky that i got enough comps with the same situation. the thing that drives me crazy is that the builders are adding the basement finished space on the MLS living area, and many times to the public records. the big problem is that if you don't know this, and are using these living areas noted in the MLS as comp GLA's, plus a finished basement then what the h*ll is CU getting into it's data base. yes, incorrect info. i haven't had a problem because my lender's level of tolerance is good, or perhaps CU hasn't figured out why there are so many variances in figuring out the finished basement area away from the appraisal GLA.

 

[J Grant]

Below from Fannie:

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.

In photo the area in arrow (bottom lower third) is not significantly out of ground...or does anyone think it is? However, it can contribute the same $ per sf value as the other floors ( depending on market, ) or it could contribute less . Adjusting it as a line item in this manner can show that but it is more work than lumping it in with total GLA

 

[glenn walker]

I am with J. Grant on this one and I don't care what the book says a typical buyer would use it and purchase it as GLA so even if I counted it as below grade I would value it the same as above grade. And as far as ANSI its a guideline nothing more nothing nothing less and each market area and even State to State differs on how real estate is sold-marketed or valued.

 

[Meandering]

Sure,
Makes no difference that the form is delineated as;



You just put that below below grade stuff in the above grade line and make a claim that Basement is a prejudice term, that no homeowner should have to bear the thought that their home actually has a basement.

Grade neutral terms and safe spaces for appraisers, that's what you need.

.

 

[hastalavista]

I am with J. Grant on this one and I don't care what the book says a typical buyer would use it and purchase it as GLA so even if I counted it as below grade I would value it the same as above grade. And as far as ANSI its a guideline nothing more nothing nothing less and each market area and even State to State differs on how real estate is sold-marketed or valued.

Agree with Glenn and by inference, JGrant.

In my experience, the vast majority of the scenarios that I see in the markets where I practice, what would be considered "below grade/basement area" in other parts of the country are simply not considered to be that in our markets. And, the GSEs don't have a problem with that. That isn't to say we don't have "basements"; we do, but true basements are very rare. What we do have are a lot of partially below-grade areas (especially on hillside slopes); they are marketed, valued, and identified as GLA all day long, every day of the week.

Having said that, every now and then we get a situation where the area in question is significantly below grade and it is best identified as a "basement" area. I get them from time to time (last one was about 2 years ago) and I find them to be a PIA because they are not that common and if I am going to value it on a GSE form to GSE expectations, then I'm going to segregate it out and do it that way.
Based on the photo, the area you identify would be a "basement" in my identification-scheme. As Glenn pointed out, the value may be the same as living area. Your challenge (IMO) is going to find similar homes with similar configurations that can be matched to the subject. If you cannot find them, then the next step would be to find dissimilar properties with a similar basement configuration and (a) show that these properties are marketable (not that difficult) and (b) use them as data to analyze the contributory value of the basement space (does that space trade at the same price as GLA or not?). I'm loath to put a non-comparable into the sales grid to demonstrate that one element (the basement) is acceptable in the market and to use as a basis to offset an adjustment, but that's me. I'd much prefer to do that analysis off-grid (dissimilar sales to support an adjustment conclusion) and then reference that analysis as the basis for my adjustment in the grid.

I always smile to myself when I read threads in other parts of the country/markets where they are arguing about basements because I considered myself lucky that I don't run into that situation. Until I do. Then the smile wipes clean pretty quickly.

Good luck!

 

[Meandering]

We don't have a lot of what the re

Agree with Glenn and by inference, JGrant.

In my experience, the vast majority of the scenarios that I see in the markets where I practice, what would be considered "below grade/basement area" in other parts of the country are simply not considered to be that in our markets. And, the GSEs don't have a problem with that. That isn't to say we don't have "basements"; we do, but true basements are very rare. What we do have are a lot of partially below-grade areas (especially on hillside slopes); they are marketed, valued, and identified as GLA all day long, every day of the week.

Having said that, every now and then we get a situation where the area in question is significantly below grade and it is best identified as a "basement" area. I get them from time to time (last one was about 2 years ago) and I find them to be a PIA because they are not that common and if I am going to value it on a GSE form to GSE expectations, then I'm going to segregate it out and do it that way.
Based on the photo, the area you identify would be a "basement" in my identification-scheme. As Glenn pointed out, the value may be the same as living area. Your challenge (IMO) is going to find similar homes with similar configurations that can be matched to the subject. If you cannot find them, then the next step would be to find dissimilar properties with a similar basement configuration and (a) show that these properties are marketable (not that difficult) and (b) use them as data to analyze the contributory value of the basement space (does that space trade at the same price as GLA or not?). I'm loath to put a non-comparable into the sales grid to demonstrate that one element (the basement) is acceptable in the market and to use as a basis to offset an adjustment, but that's me. I'd much prefer to do that analysis off-grid (dissimilar sales to support an adjustment conclusion) and then reference that analysis as the basis for my adjustment in the grid.

I always smile to myself when I read threads in other parts of the country/markets where they are arguing about basements because I considered myself lucky that I don't run into that situation. Until I do. Then the smile wipes clean pretty quickly.

Good luck!

Aside from that nasty basement nomenclature,

How do you know if..........
above grade space sells for the same prices as
below grade spaces,
if you don't separate the above and below grade spaces
of all the comps
and compare them???

 

[CindyR]

. And as far as ANSI its a guideline nothing more nothing nothing less and each market area and even State to State differs on how real estate is sold-marketed or valued.

i certainly agree with that and the others but if you are working in a state where compliance with ANSI guidelines is MANDATORY then it is below grade and must be reported as such. You will certainly value it as your market dictates but the measuring/reporting part may not be based on market perception in those states.

 

[hastalavista]

i certainly agree with that and the others but if you are working in a state where compliance with ANSI guidelines is MANDATORY then it is below grade and must be reported as such. You will certainly value it as your market dictates but the measuring/reporting part may not be based on market perception in those states.

California has no such requirement.

 

[hastalavista]

Aside from that nasty basement nomenclature,

How do you know if..........
above grade space sells for the same prices as
below grade spaces,
if you don't separate the above and below grade spaces
of all the comps
and compare them???

Thanks for the not-so-nuanced inference that I'm suggesting one just wave a magic wand to come up with a number.
But I guess I wasn't clear: In this case, the issue will likely be finding comparables with the similar basement element. Since I didn't think it was necessary to explain how to find similar comparables, I provided an alternative: Find non-comparables with the similar element (a basement) and...

...use them as data to analyze the contributory value of the basement space (does that space trade at the same price as GLA or not?)

 

[glenn walker]

Thanks for the not-so-nuanced inference that I'm suggesting one just wave a magic wand to come up with a number.
But I guess I wasn't clear: In this case, the issue will likely be finding comparables with the similar basement element. Since I didn't think it was necessary to explain how to find similar comparables, I provided an alternative: Find non-comparables with the similar element (a basement) and...

Denis - Don't fight it because unless you have some page number or government source to cite it's a futile battle that you cannot win because that's what the book says and the book is never wrong and unfortunately the fact checker will probably say this statement is not USPAP compliant which is my third violation today and thank god I am located in a Sanctuary State where I can hide in a school or hospital if those nasty ANSI police come looking to get me : )