Apprasial of basement

[Mike Kennedy]

Appraisers may deviate from this approach if the style of the subject property or any of the comparables does not lend itself to such comparisons.However, in such instances, the appraiser must explain the reason for the deviation

Well let's see, in the early 2000s Reelators decided to float "trial balloons" by increasing GLA on listings by 50-100% at the same LP/SF as Above Grade GLA, Assessors reacted in unison "they know it's below grade, WE know it's below grade, but, hell if theyre gonna list em n sell em that way and double their commissions - we'll tax em that way" and double our Taxes - let the out-of-market Duhpraisers and Buyers figure it out. IT'S PARTY TIME!!

 

[Mike Kennedy]

"must not be included in the above-grade room count."

Fannie also repeats "must not" 3-5 more times then capitulated with the "escape" clause to bolster their earnings.

 

[OHioCertRes]

Sorry , didn't mean to try and mislead the OP with the omission that section. Just tried to help them understand the below grade thing.

 

[hastalavista]

Sorry , didn't mean to try and mislead the OP with the omission that section. Just tried to help them understand the below grade thing.

No, I didn't mean to imply you had intentionally left it out.

You can see (by some of the posts in this thread, and in other threads when this subject comes up) that the basement issue is a regional/local thing.
:new_smile-l:

 

[hastalavista]

"must not be included in the above-grade room count."

Fannie also repeats "must not" 3-5 more times then capitulated with the "escape" clause to bolster their earnings.

Come'on Mike. :laugh:
Fannie's "escape clause' doesn't change the way many appraisers (or users) expect these issues to be handled in the markets where such differences are an important element of comparison.
I'm sure you don't vary your practice; not just because Fannie says what it says, but because (in your market), there is a differentiation.

Just accept that what occurs in your market isn't universal. :new_smile-l:
These spaces (in my market) are appropriately described, reflected in the report, analyzed, and valued based on how the market participants react.

There is nothing misleading, inappropriate, or nefarious. :new_smile-l:

 

[Doug DeMars]

Yeah, I find it kind of funny when these conversations come up regarding "basements".
Obviously, it is an important and appropriate element of comparison in many parts of the country, and I respect the appraisers in those markets who have to be able to differentiate the area, analyze the differences, and support the adjustments.

I'm just glad I don't have to do it (I've appraised maybe 20-25 homes with what anyone would call a fully functional and finished "basement" used as an extension of the house, finished in the same (or better) quality/condition as the "above grade" living area. But I've probably appraised more than a 1,000 homes with what many east of the Rockies would call a basement, but in my markets it is GLA).

:new_smile-l:

(Doug: BTW, REAA is teaching the USPAP class in Pleasanton on January 15th, 2015. Continental breakfast, lunch, and the USPAP Book, all for $180 non-members/$125 for members. The greatest deal of all time! :new_smile-l.

Thx Denis...
However, I already took the AI USPAP earlier this month in San Jose.

 

[hastalavista]

Thx Denis...
However, I already took the AI USPAP earlier this month in San Jose.

That's right; you had already told me!

 

[Tim Hicks (Texas)]

So, if you have no comparable sales with similar below grade areas, how do you know it is equal in value? Wouldn't you need other below grade sales to prove the equality? If so, then you could still separate the area because there would be similar sales to utilize. If the market perceives no difference, there would be sales to support this theory. The "I don't have any comparable sales, so I am going to include it in GLA crowd sure seems to be stepping out on a limb with nothing to support the assumption."

Does anybody get this logic? If it is equal enough to deviate, shouldn't you have proof? If you have proof, there is no reason to deviate. Market acceptance is a broad term that should have some evidence, shouldn't it?

 

[hastalavista]

So, if you have no comparable sales with similar below grade areas, how do you know it is equal in value? Wouldn't you need other below grade sales to prove the equality? If so, then you could still separate the area because there would be similar sales to utilize. If the market perceives no difference, there would be sales to support this theory. The "I don't have any comparable sales, so I am going to include it in GLA crowd sure seems to be stepping out on a limb with nothing to support the assumption."?

(my bold)

I must have missed that post, Tim. Who said that?

 

[Deleted member 128537]

I agree with Tim Hicks. It has to show up in the market. The below grade seldom costs the same as above grade finish. Also one has to be careful that the lower level finish is to the same quality as the above grade finish. We don't have many basements in my area, so when I run across them I typically look at my cost analysis for making adjustments and take into consideration some depreciation. It seems to come out pretty well.

Also I agree that a 30% drop in value from 2005 is not atypical for many parts of the country. And I think I just read that according to Schiller we haven't caught up to historical appreciation trends.