Fannie Mae: NO more Finished Basement included in GLA Starting February 2022

[Amy Perkins]

This is "grade" as in the level of the earth, not below the quality of the main floor.

So just adjust it for more money if it's good quality. Fannie can't tell us how to adjust (Yet).

Below grade = Below the dirt

Do not trust the assessor's SF, they include it a lot... OMG what a complete and total mess!

Assessor's are not necessarily appraisers, they don't need a license to work for the government (Exempt, but preferred in higher-end markets).

All for the sake of UAD perfecting...

Yes, I know there is a post about this but I want it to be CRYSTAL clear for all appraisers so they don't get caught in this nasty web of deceit.

 

[Fernando]

This is "grade" as in the level of the earth, not below the quality of the main floor.

So just adjust it for more money if it's good quality. Fannie can't tell us how to adjust (Yet).

Below grade = Below the dirt

Do not trust the assessor's SF, they include it a lot... OMG what a complete and total mess!

Assessor's are not necessarily appraisers, they don't need a license to work for the government (Exempt, but preferred in higher-end markets).

All for the sake of UAD perfecting...

Yes, I know there is a post about this but I want it to be CRYSTAL clear for all appraisers so they don't get caught in this nasty web of deceit.

I'm glad your making it crystal clear because few listen to me.
I'd been saying below dirt but Fannie never made it clear. What if 6 inches below or 1/10th foot?

 

[sputnam]

Fannie didn't make it "crystal clear" because in the world of appraising 'below grade' has meant below the level of the ground for at least 37 years. I don't know about before that because I wasn't an appraiser before 1985. The rule is, and has been for a long time, that if ANY part of the floor of the dwelling is below the ground, that entire level of the dwelling is basement. As has been said over and over and over in these forums.... it DOES NOT CHANGE THE DWELLING. It allocates which portions of the dwelling get called basement and which parts get called GLA. GLA or fiinished basement is worth whatever the market indicates it's worth. In some markets, finished basements might be just as valuable as GLA. In some markets, it isn't.

 

[djd09]

it is the anti market measuring standard, any 1 inch below grade homes is passed on to the donkeys because misleading is misleading

 

[sputnam]

It's not misleading. It's simply a matter of Realtors and Appraisers using different approaches in describing the property. The Realtors job is to market and sell property. The Appraisers job is to develop and report an opinion of value. Yes, it's a complication. It's our job as Appraisers to deal with it. As already stated, this isn't new. GLA has been defined as heated, finished, and above the ground for at least 37 years.

 

[djd09]

It's not misleading. It's simply a matter of Realtors and Appraisers using different approaches in describing the property. The Realtors job is to market and sell property. The Appraisers job is to develop and report an opinion of value. Yes, it's a complication. It's our job as Appraisers to deal with it. As already stated, this isn't new. GLA has been defined as heated, finished, and above the ground for at least 37 years.

actually fannie's guidelines had a built into a side of hill exception, and now berm houses, so GLA can be below grade

 

[sputnam]

actually fannie's guidelines had a built into a side of hill exception, and now berm houses, so GLA can be below grade

I don't think so. Neither ANSI, now adopted by Fannie.. nor Fannie has ever included basement areas in GLA.

 

[Fritz in NY]

Where is the GLA allowed to be included on a "slope"? Per Fannie, I can't find it. It would make some sense to include the "Walkout" above grade part of the BASEMENT in GLA if it is truly above grade, has the same utility & quality of the "All above grade space".
I remember doing the calculations "Zestimates" LOL, of this space, 1/3 rd above, 1/4 above grade etc. and never had a lender question it.

 

[TerryRohrer]

Where is the GLA allowed to be included on a "slope"? Per Fannie, I can't find it. It would make some sense to include the "Walkout" above grade part of the BASEMENT in GLA if it is truly above grade, has the same utility & quality of the "All above grade space".
I remember doing the calculations "Zestimates" LOL, of this space, 1/3 rd above, 1/4 above grade etc. and never had a lender question it.

I can't tell for sure what you are estimating. It appears you are including parts of some levels as GLA and some as basement? Per FNMA, if any is below grade, the entire level is not GLA:

"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."

How is the gross living area measured and calculated?

selling-guide.fanniemae.com

 

[Amy Perkins]

Converted garages below the level of the main raised foundation floor could be included as gross living area, but not a sloping home with one wall even half way up to the windows. I had one luxury ocean view property that had half build into the hillside. It was a multi-million dollar property, I suppose only the entryway and the garage were actually above grade. This also leads to the question of guest houses and whether they are included in the gross living area. Maybe they are above grade, but I will usually adjust for these on the lines below for a Pool house or "Casita." Agents tend to include these areas. Assessors in Santa Barbara will typically include these as gross living area, but sometimes not. I suppose how ever the mood strikes at the moment is how it goes. Tennessee is even worse as their assessors are not even appraisers! So they have no standards or guidelines to follow, what's worse is if they put it in as GLA they get taxed at a higher rate, NO Prop 13 here. They have a formula and they just enter the data. If this market crashes it's going to be tax appeals all day long. I even doubt they could keep up with it since the government is used to a smaller population. The infrastructure is like a levee ready to break with this surging population influx. When these people on a fixed income get their doubled tax bill; it's going to get rough. The state assessor said that it's a red state, so they wouldn't want Prop 13. I was thinking why would a red state want to pay more taxes? I thought red states were all about lower taxes. I suppose they think that they would pay less if it is assessed every two years. Nope, not happening. Prices doubled in two years.