• Welcome to AppraisersForum.com, the premier online community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

Do You Count As Sf Or Basement

Status
Not open for further replies.
Funny you should say something about a tri-level dwelling. I have a book by the Appraisal Institute that says " A split-level home provides additional living area at a very low cost. In most parts of the country, the lower level is considered part of the gross living area, not a basement" (Appraising Residential Properties, Third Edition).

This was my thought process when determining if the lower level is indeed a basement or GLA. Although I do think the lower cost statement is not the case here.
 
I do not know anything about the comparables used. Sorry.

I do not know the purpose. I venture to say that if the first appraisal was for purchase, the second may be for a refiance.
 
So, both reports would have been for lending purposes.

Would Fannie Mae guidelines have been applicable???
 
To be consistant in our practices, any area below grade must be considered finished basement space. It should not be counted in the GLA, which is generally regarded and defined as "Above Grade Living Area". However, depending on the degree and quality of the finish, it can certainly have a value that reflects a high percentage of the above grade living area cost or value. Hopefully other comparables with similar amenities will provide adequate support. We have the same problem in our area with bi-levels and tri-levels. But I believe you still have to define the below grade area as "finished basement".

I would argue against the assertion by the builder that the below grade area costs just as much to build as the above grade space. Similarily, a second floor area usually is cheaper to build for many obvious reasons. That is why cost tables for 1.5 and 2 story homes reflect a reduced cost of construction. The below grade area is always on slab, drainage is often an issue and it has no roof costs.

Just my thoughts, though many other good appraisers may find reasons to differ.
 
Thanks for that link. I have been looking for that paragraph. I knew I had read it on the internet but could not find the site again.
 
That's a good link, Pam, but it may not tell the whole story. I seem to remember an exception in the ANSI standards that allows below grade space to be counted as GLA if it contains living areas without which the house would not be habitable. I'm operating from memory here, and cannot remember where I got this info (must have been on a previous discussion of this same topic). However, if it is correct, then the subject house, which has its kitchen in the below grade area, would have the lower level counted as GLA - just like a berm home.
 
Hi Mark.... I am responding to your email. Here is how I handle this and how I teach my students.

If any portion of the improvement is below grade (below the threshold) then it, by fannie mae guideline, is to be reported as below grade even though there might be a walkout.

Some other ways to determine this are: 1. Is the floor slab? 2. Are the walls concrete?

Right now, IN MY MARKET, tract built average quality construction is around $88 SF above grade while below grade is closer to $38 SF for homes of median price, say $180,000. Please to not use these numbers since they apply only to MY MARKET. It can however indicate a possible ratio of above grade to below grade. Generally speaking, the below grade will have a low cost and also a lower market perception of value.

Do you have a Marshall/Swift residential cost book? Check out how it treats trilevel homes. Remember to adjust for your location and time. There is nothing wrong with using the same unit of adjustment for both above and below grade in the grid IF SUPPORTED BY THE LOCAL MARKET. Many appraisers use, say, $25 as an adjustment for size differences in GLA. This, obviously, does not represent cost...as in the cost approach. It is merely a number the appraiser determines to be appropriate for their market for adjustment. The same number could be used for below grade finished area.

If there is a walk-out, I prefer to adjust for this feature under functional utility rather than lumping it all together in the below grade box. Why? Because I can then handle two properties with below grade where one is a walk-out and the other isn't. You will notice two lines for below grade. The first line I use for raw square footage adjustments. The second line I use for finish. It might look something like this:

1000SF 95% Fin
3Rm,1Bd,1Ba

Of course, my way is not cast in bronze but I have found it easily illustrates how I make my adjustments and why.

Hope this is benefit to you, I wish you well!
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at AppraiserSites.com
Back
Top