Above Grade & Below Grade Areas

[Phil Rice]

Just for consisitency sake, they should be separated out. Just because your subject has the most perfect basement in the world, your sales are not likely to be that way.

It is one thing to say- I choose to do it this way for consistency sake. It is another to say my way is the only right way, and anyone who is different is putting out misleading reports.

Walk out basements and tri-level/split level homes are good examples of situations that sometimes call for judgment and understanding of local custom.

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).

And just because some 3 foot section of a level is 2 feet below grade does not mean that the home is worth $(pick your number) less.

My point is that no matter what you call it, the value should be the same. If the appraiser is intentionally comparing apples to oranges, then it is misleading - but this is likely done for the purpose of supporting an unrealistic market value.

If the value is right and proper disclosures are made, the appraisal report is not misleading.

 

[Randy Beigh]

My point is that no matter what you call it, the value should be the same.

I would think all of us would agree with that statement, but hey. :lol:

 

[Jo Ann Meyer Stratton]

If your subject has 1,000 square feet of above grade livable area and 1,000 square feet of below grade livable area that has the same construction, materials, finish work man ship, interior amenities--it can be appraised in two different ways, both ways probably the same value. It has to be reported as two separate levels on page 1 and in the cost approach.

Now when you get to the researching the market--the only information you can find after talking to realtors, buyers, sellers, pulling building permits, researching county assessor's records, etc, etc, etc is all the sales have 2,000 square feet, built by different builders, etc. When you drive down one side of the street all you can see is one level, when you drive down the alley you see two levels. Now how much square footage is on each level? If you cannot answer that question on every one of your comparables--you are going to have to refer to the last sentence in Fannie Mae guidelines and report the total livable area for your subject as a lump sum so that you can compare total livable area to total livable area.

If you are extremely fortunate and everybody (public and private information) has very clear reports of square footage for each level for every comparable--now you can report your subject's above grade on one line and your subject's below grade on the basement line and then compare above grade to above grade and below grade to below grade for each of the comparables.

If the first situation occurs and you decide you have to report the above grade on one line and the below grade on the basement line--and now you are comparing your subject's 1,000 square feet to all the comparables 2,000 square feet and then on the basement line you have to make an across the board adjustment for the lack of basements for your comparables. To me that does not present a very clear and concise report.

And in all the situations provide very detailed explanations of what, why, how come, etc, etc, of exactly what you have done so a reader of the report can understand and follow your footsteps exactly!

So again--what information can you find out about your comparables? That is the big question that determines the reporting format on page two.

 

[Steve Owen]

Walk out basements and tri-level/split level homes are good examples of situations that sometimes call for judgment and understanding of local custom.

That would depend on whether you are using ANSI standards for measuring the residence. ANSI is a nationwide standard. My understanding is that FANNIE wants appraisers to use ANSI, otherwise, there is no absolute requirement that you use it. But, if you use ANSI you must use all of it - you cannot pick and choose which of the measurement standards to follow.

ANSI says that if any portion of a level is below grade, then that entire level counts as below grade and not included in GLA. The only exception I am aware of is that if areas necessary for function are below then that level can be GLA; so, if the only kitchen is down there, then it can be GLA. So... IMHO, if you are not doing it according to ANSI (the only availble, consistent standard) then you are doing it wrong.

 

[Jo Ann Meyer Stratton]

In all my comments on this issue--I am not advocating not following ANSI standards. While in the field measuring the subject property, then sketching and calculating the area, I do strongly advise following ANSI standards for the subject property. It is when you get to the sales comparison approach you have to analyze the information that is available for the comparable sales, listings, pendings, etc. Unless you measure each comparable to ANSI standards also, you have to use what information you can glean from many sources. After you have gleaned that information, then you have to make a determination of how to relate that to your subject--always keeping in mind that the comparison of components has to be similar components to similar components. So if the only information available is lump sum for the comparables than that lump sum has to be compared to subject's lump sum. If you have a break down of each component for the comparables, then you can compare each break down of the comparable to the same breakdown of the subject.

When you measure--follow ANSI standards. When comparing items follow the local market that is applicable to the subject.

And then explain in very clear detail what, why and how you did what you did.

 

[Phil Rice]

My goal is to get the value right.

ANSI says to round all measurements to the nearest inch. I round to the nearest foot.

I am not suggesting that ANSI should be completely ignored. I have read it over and I try to follow most of what it says. But I am suggesting that for the typical appraisal, rounding to the nearest foot is the smart thing to do. IMHO, those who think:

if you use ANSI you must use all of it - you cannot pick and choose which of the measurement standards to follow

are doing it wrong

 

[Jungle Boy]

Phil

I round to the nearest 3 inches. My sketch is more accurate than yours.
My final value opinion is not any more accurate than yours.
It's the value that counts.
I know, that's what you've been saying.

Rami

 

[Jill Quattlebaum]

Deleted

 

[Alan Simmons]

The best comment I have heard about this was that “most appraiser do not know how to appraise past the comma.” The point was that Fannie Mae Guidelines do allow appraiser in the sales grid to include the below-grade areas in with the GLA (when such best reflects the subject market) but that most appraiser do not bother to read that far.

The question should be do appraisers report the market or define the market?

 

[Mike Garrett RAA]

This is getting out of hand! :rofl:

My county measures to the nearest .25 foot and so do I. More and more real estate agents are using what is of public record for the square footage and foregoing measuring the property themselves to avoid liability. I have a comment in my addendum that the square footage is approximate and if there is a conflict between the public record and the MLS...I use the public record.

The issue in this thread isn't who's measurement is the most correct, it's do we, as appraisers, consider below grade in the GLA. My contention is that reporting it one way on page one and in the cost approach and then doing something different in the grid could be mis-leading.