Calculating liveabe area on raised ranch

[CANative]

Again, with appropriate comments. Pretty common in hilly, mountainous regions. An appraiser who stubbornly stuck to the letter of the law would probably subject himself to criticism and complaints. And rightfully so.

If you just want to make a silly argument, maybe some other time.

If the market recognizes partially below grade as GLA and that's how it is always marketed and sold, the appraiser would come off as an idiot if he excluded the partially below grade area and used smaller GLAs as comparable sales.

 

[Terrel L. Shields]

if he excluded the partially below grade area and used smaller GLAs as comparable sales.

That requires two things. Your comps must be similarly divided and they have to use smaller GLA...that last being unnecessary if you do the former.

If there is only one level with siding and the lower level is concrete block or concrete then I am going to segregate the upper and lower floors and treat separately. They cost differently and they are treated differently. (i am not the one who labeled this a basement. It is in Louisiana and you can guess the issue with water. I don't see these type houses here, but partially exposed finished basements here bring substantially less per SF except on the steep hillsides surrounding the lakes, etc. where people pay a premium for the lot and must dig into the hillside in order to build almost anything.

 

[CANative]

All real estate is local.

 

[sandpiperapp]

I don't disagree with that, except for the fact that the agencies, as well as HUD, have specific guidelines regarding above and below grade GLA. Just a good idea to be up to speed with guidelines, as well as what the market says...

Which is what I said. Appraise first, explain second. No where did I say to ignore the alphabet entities guidelines, just that they should take second seat to the market.

 

[Mr Rex]

It's either above grade or below grade IMHO. If you can't explain your way out of a paper bag, maybe ask if you want fries with that is your next career.

 

[alebrewer]

Which is what I said. Appraise first, explain second. No where did I say to ignore the alphabet entities guidelines, just that they should take second seat to the market.

My apologies. It seemed like you were implying that 'guidance from the alphabet soup entities' was less important than what the market was/is saying. IMO, they go hand in hand.

 

[Mike Garrett RAA]

I bet I get called at least once a month because a home owner thinks I didn't get the square footage right. "yes sir, I did get it right...it's just that per appraisal rules any area that is below grade, even if just a little bit such as a walkout lower level, MUST be identified as basement and finished area below grade. In many cases it gets adjusted at the same rate as the above grade. Hope that explains how it's done". I won't say real estate agents are stupid as I am a REALTOR EMERITUS but ......oh, never mind. Another thing that drives me nuts is use of PRICE PER SQUARE FOOT as criteria for justification of a contract price. Maybe some day they will come to realize price per square foot in an appraisal isn't the same thing?

 

[James Mpls]

I bet I get called at least once a month because a home owner thinks I didn't get the square footage right. "yes sir, I did get it right...it's just that per appraisal rules any area that is below grade, even if just a little bit such as a walkout lower level, MUST be identified as basement and finished area below grade. In many cases it gets adjusted at the same rate as the above grade. Hope that explains how it's done". I won't say real estate agents are stupid as I am a REALTOR EMERITUS but ......oh, never mind. Another thing that drives me nuts is use of PRICE PER SQUARE FOOT as criteria for justification of a contract price. Maybe some day they will come to realize price per square foot in an appraisal isn't the same thing?

Mike, I want to be you, later in life. Love the response.

 

[Mike Kennedy]

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selling-guide.fanniemae.com

"Gross Living Area
The most common comparison for one-unit properties, including units in PUD, condo, or co-op 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. The need for consistency also applies from report to report. For example, when using the same transaction as a comparable sale in multiple reports, the room count and gross living area should not change.

When calculating gross living area

• The appraiser should use the exterior building dimensions per floor to calculate the above-grade gross living area of a property.
• For units in condo or co-op projects, the appraiser should use interior perimeter unit dimensions to calculate the gross living area.
• Garages and basements, including those that are partially above-grade, must not be included in the above-grade room count.

Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area. 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. 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 & Finished Rooms Below-Grade line in the Sales Comparison Approach adjustment grid."

oh wait - we'll lose $$$ so................

"For consistency in the sales comparison analysis, the appraiser should compare above-grade areas to above-grade areas and below-grade areas to below-grade areas. The appraiser may need to deviate from this approach if the style of the subject property or any of the comparables does not lend itself to such comparisons. For example, a property built into the side of a hill where the lower level is significantly out of ground, the interior finish is equal throughout the house, and the flow and function of the layout is accepted by the local market, may require the gross living area to include both levels. However, in such instances, the appraiser must be consistent throughout the appraisal in his or her analysis and explain the reason for the deviation, clearly describing the comparisons that were made."

(Whew - that was a close call)