Above Grade & Below Grade Areas

[Liz South]

Did a review recently where the appraiser counted the walk-out basement as being in above grade area and lumped all of the areas together. (ie 1st & 2nd fl were approx 2,800 sf and the basement was approx 1,200 sq ft. They considered the dwelling to be 4,000 sf for comparisons sake).

I was always taught that in this market (VA) any level that ANY OF IT was below grade then that whole level was considered to be below grade (ie a basement).

Anyway, pointed this out in the review and now have received a rebuttal which is WORSE that the first. The appraiser has simply manufactured numbers but is sticking by his guns that he can add below grade area into GLA.

Does anyone have anything in writing from someone official like ANSI or someone that states that below grade areas are counted separately? Would love to be able to quote someone official in this rebuttal.

Thanks for the help.

Liz S

 

[Jeff Horton]

Fannie Mae guidelines say something to the effect that if the fished floor is below grade it is below grade period. I don't understand why people fight this so hard. If you adjust it properly it doesn't affect the value!

ANSI:
ABOVE- AND BELOW-GRADE FINISHED AREAS
The above grade finished square footage of a house is the sum of finished areas on levels that entirely above grade. The below-grade finished square footage of a house is the sum of the finished areas of levels that are wholly or partly below grade.

Cut and dry.

 

[Otis Key]

Jeff - not so "CUT AND DRY".

Fannie also says to treat it by local custom. So if the local market reflects that a split-level or tri-level house is to include that lower level in the heated total square footage, then that's the way it's to be treated in the sales comparison approach.

In other words, on page one split the lower level out to basement. In the sales comparison approach, if it's customary, then combine them, but you had better clearly indicate it's that way in that market.

 

[Steve Owen]

Also, I understand (although I cannot quote the source) that if the below grade space is necessary to make the house livable you can make an exception. (Berm's are a good example.) For example, if the only kitchen is below grade, then you can make an exception and call it GLA.

 

[Kevin A. Spellman]

The secondary market has always stated if the property is market accepted they will buy the loan. Support the subject with data.

You can do anything that is reasonable. Remember the lender/client will believe a comparable sales data before they believe an appraiser opinion. Treat the sales as you treat the subject. If the market pays the same for each level then present the data in that format. Presenting the lower level in the GLA should create compatibility to the sales, if not, the appraiser has created a miss-leading report.

 

[Mike Garrett RAA]

And when you combine the areas you are producing a mis-leading appraisal report.

Fannie Mae, HUD, and VA all say...if it is below grade it is below grade...end of discussion.

Do it correctly, if you want to adjust both level at the same amount you can do that but I challenge you to prove the below grade is worth as much as the above grade.

 

[Risky Business]

Mike,

If the subject and or comps are marketed and the Public records indicate as well, that the GLA of a dwelling is zzz including the basement (finished) where I live if its finished if so indicated and is included if all criteria is met (safety) per say, then it's included based only on the subject's marketability, and those like it.

 

[Risky Business]

Mike,
I forgot to add, your challenge to find such comps or situations of proving similar sales etc, with or without basements, wont hold here. Fmae and others readily make a loan or decline with at least my explanations of a basements worth, again, bases on facts.

 

[Mike Garrett RAA]

Do it anyway you want to...it's still wrong!

 

[Edd Gillespie]

Originally posted by Mike Garrett, RAA@Jun 26 2005, 11:58 PM
Do it anyway you want to...it's still wrong!

Mike, you are becoming, shall we say resolute, in your seniority. I admire the clarity of your statement.