GLA Or Not GLA......

[Richard J. Glesser]

Having read the Appraiser's Bible from AI, there is little doubt that if any part of a level is below grade, it's not to be considered living area.

Then I put the old grey matter to work. If the finish is equal and it is above grade on 1 side, perhaps it can be considered GLA. The validity of the report is based on the process and the data used to reach the conclusions. I made a substantial income redoing appraisals which were originally done by AI diehards or their firms which disallowed any below grade GLA. Problem - do you have a livable home with no kitchen or maybe no bedrooms since they may all be located below grade? Problem 2 - when homes are built into hillsides or high river banks with only the garage at grade, do you appraise a riverfront garage with a three level basement? While the AI will bless you and allow you to sleep at night, the underwriter and secondary market will toss the loan.

My solution has always been "Apples to apples and oranges to oranges." So long as I treat the subject and all my comparable sales equally, I can reach a valid value. Lower levels must be finished at or better than above grade. If you're valuing a fully finished trilevel and you have sales of such for comparables, the validity of your report depends on equal treatment of the lower level. You can't call the subject 1500 sq.ft. on a crawl/slab and the comp 1000 sq.ft. on a crawl & part bsmt, thus inflating the value through a created, but false, square footage adjustment which is greater than the basement adjustment. By valuing the subject with like properties, I have now brought the home up to secondary market standards by giving it bedrooms or a kitchen or whatever necessary rooms the lower level provided.

Again, the validity of the report is based on consistency, not the AI Bible.

For any of you concerned with my well-being, don't worry. I put on my best suit of armor and thickest skin before writing this comment, knowing the impending onslaught from the AI standard bearers was inevitable. :usa:

 

[Mike Garrett RAA]

You will need your armour! Not only the AI bible, but also Fannie Mae guidelines, and HUD and VA supplemental standards say if any part of it is below grade...IT IS BELOW GRADE!!!.

Why fight the system? You can make your adjustments below grade at the same dollar per square foot as the above grade if you feel the quality is the same. What opens an appraiser up for criticism is when they do something totally different from their peers.

 

[Jo Ann Meyer Stratton]

Richard: I agree, there is another thread regarding comparables and basements because of the situation in Maricopa County, AZ. The important thing is consistency and reflecting the market of the subject. If the information regarding any below grade or partially below grade area for the ALL comparables is available--then sail onward with splitting the two. If there is not any information regarding the comparables available from anybody and the only way an appraiser could find out how much area in each comparable on each level would be to go measure every comparable and walk through the interior of every comparable, then the total livable area would need to be reported on one line of the sales grid for the subject and all comparables to remain consistent. I just finished a home that below grade die-hards would have said was a 1,600 square foot one story home--with two rooms, a great room and a bedroom and one bath. The rest of the house with all the other bedrooms, baths, family room, etc were below grade. A prospective buyer of that home would be interested in the home because it has three bedrooms, three baths, etc. They would not be interested or even look at a one bedroom, one bath house. Those older homes in Bisbee or Jerome would be three story below grade homes because only the front is above grade, the sides and rear are built into the hill. And you go down hill from out of the doors from the lowest level. The next door neighbor is above your ridge pole of the roof.

I copied the last sentence in Fannie Mae guidelines regarding this situation in the Basement/Comparable thread, check that thread out.

 

[Farm Gal]

Mike:

The problem arises when your sources (agents, MLS, County Records and all) record the GLA and finished basement as GLA, with no distinction between 'em.

IF you cannot reasonably ~even after interviewing the 'principals'~ determine what area is attributed to which, it is not unreasonable to lump them together IF you clearly indicate what you did and why... I have no sympathy if there are reasonably good sources to make the split, or if someone didn't even TRY to chase the thing down... but if there simply is NO WAY to distinguish and the market pretty clearly indicates 'devil may care, I don't!' then seems to me under the horsesense/reasonableness doctrine that an appraisers gotta do what an appraisers gotta do!

Finished attics, hillside ranches, split levels, etc... IF you can make specific distinction, then DO...

IF you can't do the best you can with what you got to work with!

But if folks wind up using superior ranches for comps on MY beat I am going to take a real close look if it lands on my desk for review: and heaven help the guy/gal who ignores 'comparable comps' in favor of dis-similar homes with out a REAL good explanation why .

 

[Mike Garrett RAA]

I have to admit we don't have that problem here, so what I do and what I recommend to my students might not apply IN YOUR MARKET.

My logic is that below grade square footage may well contribute to the size of the home, it is not nearly as expensive as above grade square footage. I like to be able to seperate finished area from unfinished area too. That is very difficult to do when it is all "lumped together" on the GLA line.

In any event, do what you have to do...just explain, explain, explain!

 

[Farm Gal]

below grade square footage may well contribute to the size of the home, it is not nearly as expensive as above grade square footage.

It can in fact be MUCH more expensive...

Cost of partial walls of concrete, with a stone finish on the exposed portions with finished interior walls inside and then baths kitchens and a superior floor (marble tile etc) on the below rgade area versus standard framing and drywall? :blink:

errr I have seen some homes with mightily more expensive cost per square foot for the below grade/partially below grade finished areas than the bedrooms and single bath above <_< ...

Mike, your MLS and local realtors appear to be more than a 'cut above': in brief you are spoiled ( a good kinda spoiled indeed!)

As usual the reality is that sometimes neither the 'form' nor the 'GUIDELINES' (not rules ) fits the property, but it oughtta still fit inside the intent/purpose of residential lending.

I go with the old guy's solution: explain, explain,explain.

and thank heaven I live in an area where the worst we sususally have to deal with is a little ole tri-level or wierd berm home on occasion.

 

[G-man]

In my market, the auditor's office in the three counties I service treat split levels with finished areas below as living area. I therefore compare split levels to split levels as it is very difficult to seperate out what is and what is not below grade living area. I've even talked to a county appraiser and she said if a basement is finished comensurate with the first floor, they can count it as living area :blink: . Learned that first hand when I appraised an attached SF ranch the county had at about 3500 Sq. Ft and I measured at 2600 because I didn't include the finished basement. Homeowner wanted to know what happened to 900 sq ft of his home. Time to start explaining guidlines and such. Yippee.

 

[Mike Garrett RAA]

Gman...it still doesn't make it right!

 

[EDWARD BERRY]

Come to Eureka Springs and see a six story where EVERY floor is ground level.

Kookey in Arkansas-ed

 

[Ben Vukicevich SRA]

Richard has it correct...as long as you comparable apples to apples in the GLA, you're OK with everybody...

It doesn't matter if it is below grade ....cause my basement level investment condo would not then exist based on AI principles, right? I mean, the entire unit is 3' below grade so it has no GLA??? I should try that logic on the tax assessor...like hey dude..all I own is a finished basement with a kitchen and bath, tax me as such. Trust me, it won't work.

Consistency is the key.

Ben

Whoops, I forgot to add, that my project is FHA approved with no exceptions, including the basement units.