Basement definition?

[Jeff Horton]

Does Fannie Mae have a definition of a basement? I am assuming anything below grade is considered basement. Is that correct?

I have one I am appraising that has a basement but it is finished out very nice and would be looked on as living space and not really a basement in the market. Sales contract bears that out too. Sloping lot so only the front is below grade. Backside is 3-4 feet above grade.

 

[Jo Ann Meyer Stratton]

What are your comparables? Do they have finished basements similar to your subject? If so will you be able to get information on all your comparables of how many square feet is in the basement and how much on the upper levels. If all the records available regarding the comparables lump everything together in one statement of GLA, then use the total of your subject for GLA---and lots and lots of explanation. If you have difinite information for each level for each comparable, then you would be able to separate your subject's upper levels and its finished basement and you will be able to comparables apples to apples (upper levels) and oranges to oranges (lower level). The important thing is that you are consistant--and that the lower levels of your subject and all comparables are actually similar in quality, livablity, etc as the upper level. In Arizona, we do not have problems with moisture below ground (or above ground--unless we are by a river), so bedrooms and baths are quite frequently put in the lower level below ground (besides it is cooler when it is 122 degrees in the shade). Those lower level bedrooms and baths are considered livable area, otherwise there would be a one story house with only one bedroom or none in the above ground area. Be the key is being consistant and explaining everything!

 

[Dave Smith]

Jeff:

Try this link for more than you ever wanted to know about basements and GLA:

]http://www.ncrec.state.nc.us/brochures/main.htmhttp://www.ncrec.state.nc.us/brochures/main.htm[/b

 

[Randy Beigh]

Jeff

Jo Ann is correct that remaining consistant is the key. However, it is real hard to use the Fannie Mae forms, add basements to the upper levels and remain consistant as these forms are quite clear that basements are to be treated separately.

My advice is to go with the flow. Divide the floors out as the form says to do, but if your market is showing the below grade value the same as the above grade, follow that yellow brick road.

 

[Jo Ann Meyer Stratton]

When I have a home that has the bedrooms and baths in the lower level, I do show in my drawing each level, labeling as lower level, main level, upper level, etc. Then each level is reported on a line of its own on the front of the URAR. If the market indicates that the lower level is considered part of the livable area and I can't get information from anyone on each (or several) of the comparables amount of livable area on each level--I lump all the levels together on the GLA line (since that is the info I have for the comparables) and then on the basement line I type "See livable area" for my subject and each comparable. And then in my addendum everything is explained so a reader knows exactly what I did and why I did it that way. But I repeat, consistency and explainations of everything is the key.

 

[Jeff Horton]

Thanks for the input. I have not started on this one yet. Just inspected it today and thinking ahead. I have not even looked for comps yet. But I suspect it is going to be difficult to find comps. Ones with basements that is.

I won't know till I get into this but I think it is over priced and I don't think I can justify the sales price on this home. Just starting to think on this one and how I want to handle it before I start.

 

[Frederick R. Ruffell]

Jeff,
I used to appraise in San Francisco and the majority of homes are built on sloping terrain and have GLA on the lowest floor that is completely below grade at the front of the house, sometimes used as a garage, and the GLA at the rear of the house completely above grade sometimes as much as 20 feet above grade (on stilts) 99% of the time these lower floors were finished out with equal or better quality materials than the upper floor(s). As most of these properties were marketed with the lower floor included in the GLA I did not have your problem with respect to comparables. It was my understanding at that time that in order to qualify as a "basement" all of the lower floor had to be below grade. This makes sense to me from a construction standpoint as the purpose of a basement is to anchor the structure below the frostline so that the structure does not get moved around by the effects of freazing and thawing through the seasons. If there are no other properties that have their lower floors finished out is this an overimprovment?, will the market pay at the same rate for this lower floor, was it built with permits?, can the building Dept enforce tearout if it was not, were these issues disclosed in the purchase contract. ETC. I may have raised more questions than I have answered. But get the best "COMPARABLES" you can and see what the market tells you. Talk with some realtors not involved in the deal and see how they would market the extra GLA.
Cheers

 

[ken freeman]

What exactly is Fannie Maes postion on the definition of a baement. There is a AMC I do work for that insist that Fannie Mae guidelines stae that any partof a room that is below grade, the entire room is than considered a basement area. Does anyone have any ammo I can fight back with. Thanks

 

[ttaM kooC]

Jeff:

Try this link for more than you ever wanted to know about basements and GLA:

]http://www.ncrec.state.nc.us/brochures/main.htmhttp://www.ncrec.state.nc.us/brochures/main.htm[/b

The link does not work for me.

 

[Mr Rex]

I got this via a google search, that took me back to the forum here" http://appraisersforum.com/ask-appraiser/69993-correct-definition-above-grade-gross.html

Per the Fannie Mae selling guide dated 4/12/02. Section 405.06.

Section 405.06 – Gross Living Area

The most common comparison for one-family properties (including units in PUD, condominium, or
cooperative projects) is above-grade gross living area. The appraiser must be consistent when he or she
calculates and reports the finished above-grade room count and the square feet of gross living area that is
above-grade. For units in condominium or cooperative projects, the appraiser should use interior
perimeter unit dimensions to calculate the gross living area. In all other instances, the appraiser should
use the exterior building dimensions per floor to calculate the above-grade gross living area of a property.
Only finished above-grade areas should be used--garages and basements (including those that are
partially above-grade) should not be included. We consider 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 and finished areas below-grade" line in the "sales comparison analysis" grid. To assure
consistency in the sales comparison analysis, the appraiser generally should compare above-grade areas
to above-grade areas and below-grade areas to below-grade areas. The appraiser 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, he or she must explain the reason for the deviation and clearly
describe the comparisons that were made.