Finished Basement Question

[dwbeale]

Have a home owner who swears their finished basement (85% is below grade)
is suppose to be considered into the total Square Footage count.

What can I quote to explain that it's not? Unfortunately I need more than just my own knowledge to validate my results.

 

[Lee Lansford]

First, define "total Square Footage count" as I am unfamiliar with the meaning of these words!

I think that THIS is your problem...you are are working with undefined terminology.

Now, if you want to discuss Gross Living Area...hand the person Fannie's current form for SFRs and point to the area on page 1 that discusses "above-grade" area as being "Gross Living Area".

Does this help?

 

[Greg Bell]

Here you go..never include basment..

XI, 405.06: Gross Living Area (06/30/02)
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 ensure 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.

 

[Otis Key]

Lee is correct. However, I ask this: Is the HO the client? If not, why are you even in a discussion about this with him/her?

XI, 405.05: Unit/Room List (06/30/02)
The Uniform Residential Appraisal Report (Form 1004) and the Individual Condominium Unit Appraisal Report (Form 1073) include a "room list" section to describe the subject property and provide a column for the square footage per level, as well as space for a summary of the above-grade room count(s) and the above-grade gross living area for the finished area.

XI, 405.06: Gross Living Area (06/30/02)
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.

http://www.allregs.com/efnma/index....2002-selling/part-xi/xi-ch-4/xi-405/xi-405.06

 

[erick anderson]

Have a home owner who swears their finished basement (85% is below grade)
is suppose to be considered into the total Square Footage count.

What can I quote to explain that it's not? Unfortunately I need more than just my own knowledge to validate my results.

Why is that? You have an appraiser's license that says you are qualified to make those decisions.

 

[Ted Martin]

If you are working with the 1004 form, read the mouse print in the improvement section on page one to the right where the square footage is entered. "Square Feet of Gross Living Area Above Grade", the basement finish is entered as a percentage nine lines up and to the left.

 

[Zero]

In addition to FNMA, you might also read/quote the ANSI standard (link available on the Forum in FAQ). It's pretty consistent with FNMA but offers a more thorough standard for what is considered GLA and what isn't.

 

[seanrieber]

Lee is correct. However, I ask this: Is the HO the client? If not, why are you even in a discussion about this with him/her?


http://www.allregs.com/efnma/index....2002-selling/part-xi/xi-ch-4/xi-405/xi-405.06

Because if you blow off the HO over something so simple then they complain to the LO. Enough of them do that and you are SOL. Just show the guideline, explain that whether you agree or not is irrelevant, that you have rules you must follow and be professional. I have done it a dozen times. Another reason to be cooperative with a homeowner is they could be a future client....homeowners get divorced and need appraisals, family members pass away and the estate needs an appraisal or their friend needs an appraisal. Why not just cooperate and explain?

 

[Mike Kennedy]

Another example of "dubblespeak"........

"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."

Like AO-19, another Key to Pandoras' Box which has resulted in doubling GLA across the board in most markets and inflating SP/SF ratios................

check your MLS........ kick up 100 sales ........determine the % which listing agents intentionally included basements in GLA .....and priced accordingly.......

Caveat......it is also the "loophole" which opened the door for some appraisers to support the Listings regardless of above/below grade........"if the MLS listing included it .....and the Tax Assessor included it - hey IT'S typical in this market - so what the hell - I included it too! So sue me!" .......

until overvaluation lawsuits "turn the water faucet off" .......this often discussed "problem of perception" will not fade into oblivion.:icon_idea:

 

[Blue1]

Another example of "dubblespeak"........



check your MLS........ kick up 100 sales ........determine the % which listing agents intentionally included basements in GLA .....and priced accordingly.......

In my market that's the hard part as realtors will most often make no distinction and not even say the home has a basement especially if it's a 'daylight' basement. (Completely finished, heated and cooled area with a couple of walls below or partially below grade with windows and doors on 1 wall) To them it's all part of living area. If I am lucky enough that the realtor has photos a lot of times I can tell from that. Otherwise, my market seems to make no distinction unless it's totally below grade area with no windows or doors. However that type of home is rare in this area.