Fannie Mae Guidelines For GLA

[Rick Bertram]

Do they want comps within 15% of the Gross living area or is it lower?

 

[Judy Whitehead (Florida)]

I usually try to go by the 15% - although there are times when I have to exceed that, especially with very small or very large homes. I start out looking not to exceed 15%. Remember, however, that these are "guidelines."

 

[Anthony Blackburn]

Check out FNMA's guidelines online at http://www.allregs.com/efnma/

Go to the Selling Guide, then drill down to:
Part XI: Property and Appraisal Guidelines (06/30/02)
XI, Chapter 4: Reviewing the Appraisal Report (06/30/02)
XI, 406: Sales Comparison Approach to Value (06/30/02)
XI, 406.03: Adjustments to Comparable Sales (06/30/02)

FNMA, to my knowledge does not have a GLA requirement. The 15% you may be confusing with thier guideline for net adjustments.

 

[Thomas Fiehler]

Ditton to what Anthony has said. Just remember that bracketing is done by sq. ft. and not $$. B)

 

[Dave Smith]

Anthony:

The 15% you may be confusing with their guideline for net adjustments.

Just where does Fannie state the 15% - 30% guideline? I don't recall seeing it in the guidelines lately. And besides they are guidelines, not laws. In my unique market area I seldom am able to stay within 15% - 30%. I explain, explain, and explain regarding my market area, with its lack of comps and the the loans go through.

Guidelines: Desirable goals, to be followed if possible.
Rules: Standards by which the game is played.
Laws: Regulations that must be followed, no matter what.

 

[Anthony Blackburn]

Dave....

This is found in the FNMA selling guide, which has all the guidelines....it's in section 406.03: Adjustments to Comparable Sales (06/30/02)

We have established guidelines for the net and gross percentage adjustments that underwriters may rely on as a general indicator of whether a property should be used as a comparable sale. Generally, the dollar amount of the net adjustments for each comparable sale should not exceed 15% of the sales price of the comparable. When the adjustments exceed 15%, the appraiser must comment on the reasons for not using a more similar comparable. Further, the dollar amount of the gross adjustments for each comparable sale should not exceed 25% of the sales price of the comparable. The amount of the gross adjustment is determined by adding all individual adjustments without regard to the positive or negative adjustments. When the adjustments exceed 25%, the appraiser must comment on the reasons for not using a more similar comparable.

And of course you are right...they are guidelines. I don't think anyone has said they are laws.

 

[Lee Lansford]

The "15% rule" for GLA goes back a long time...I'm not certain when or where.
The suggestion here is that when the "comp" varies more, or less, than 15% of the subject's GLA it starts to lose its reasonableness as a good comp.
Is this an iron-clad rule and might there be many instances where a reasonable comp sale may exceed this guideline? You bet. However, I have found over the years that when there are "significant" (note: I'll let you decide on what is "significant") differences in GLA, the adjustment applied for GLA differences when there are small differences do not seem to apply for really big differences.

 

[Pamela Crowley (Florida)]

You pay attention to the guidelines, but,

Try doing your appraisal first then address any guidelines issues. If you do the best you can and your comps and adjustments are the best they can be, then it what it is. AFTER that, you go back and find out which guidelines have been exceeded and discuss the reasons for that.

Please do not attempt to make the appraisal fit into the guidelines first or attempt to adjust according to the guidelines.

 

[Jo Ann Meyer Stratton]

Actually--Fannie Mae and Freddie Mac guidelines are very simple---explain, explain, explain and you have met the guidelines!

 

[Anthony Blackburn]

Good point, Pam...

As a reviewer, I see appraisers that omit perfectly good comparables because they don't fit into thier "Guideline Box". Sometimes the best comparables can be outside that box. FNMA doesn't say not to use a comparable if it doesn't fit thier guidelines. They say to consider and use them, but just explain how and why the comparable doesn't fit within thier guidelines and explain why it's relevant.