Including Above Grade Area Into Basement or Below Grade Area

[Terrel L. Shields]

Put GLA on the appropriate line. The non-GLA on the line below. If warranted then adjust BOTH at the same $ per unit. If comp is all GLA the one line adjusts up and the lower one down. The total adjustment gross is higher net is the same.

 

[RCA]

Serious question here. How often do you include above grade GLA into the Below Grade or Basement area? What could possibly be wrong with doing that? Especially if it makes the adjustment percentages look better.

Take my word - keep them all separate and value them separately. If the market happens to say they have the same value per SF, then so be it. You can always create an ANSI compliant "finished living area" calculation - from decent measurements. Regard that as a separate thing.

1. Above Grade Finished
2. Below Grade Finished.
3. Total Building Area
4. Garage Area
5. Above Grade Living Area Permitted & Approved (passed Final Inspect)
6. Above Gade Living Area Unpermitted or not Approved (i.e. has not passed Final)
7. Below Grade Living Area Permitted & Approved (passed Final Inspect)
8. Below Grade Living Area Unpermitted or not Approved (i.e. has not passed Final)
9. Non-Living Area capable of being converted to living area Above & Below Grade

Note 1: IF I can get all of the above on comparables, then I would run MARS on all the above just to see what it comes up with. In particular, I would be looking at those values that it says are not significant, then eliminate them on the next run. Then we have the problem that some of these overlaps, Above Grade Finished = Above Grade Finished Permitted/Approved + Above Grade Finished Unpermitted/Not Approved. ===> You will before transferring the data into the final Sales Grid, go through the process of aggregating or simplifying the data as necessary - as the forms used do not allow for such fine distinctions. That's a math and scripting problem.

My experience is that good valuation in highly complex areas like the SF Bay Area, requires more and more detail and categories. You eventually need to be writing R scripts that can process Excel tables to do everything needed --- plus likely extra footwork. Of course, almost no one wil pay you for such extra work, but you should attempt it from time to time, if you believe the trend is in that direction.

Don't need to ask anyone about the above at the paleolithic Appraisal Institute. They won't understand what you are talking about. They are all about rubber stamp methodology when it comes to number crunching, and generating rubbish when it comes to words.

 

[sputnam]

Can you be more specific....perhaps with an example scenario? In what situation would moving GLA to the Below Grade line within the sales grid be appropriate?

Are you really comparing "apples to apples" if you do this?

Why wouldn't you expand your search parameters to find more similar comps?

Okay. Assume you work in a place where the MLS reports total heated (or finished) area of split levels or split foyer designs with little or no attention to what is below grade and what isn't. Your subject is a split level. The lowest level is fully finished and is also below grade. You measure and report GLA in accordance with ANSI so, that lower level will be reported as finished basement. The other levels will be GLA. That's page one of the 1004. On page two, all of the finished area is included in the SF line of the sales comparison grid... just like what the MLS reports for the comparables (also split level)... and you make adjustments based on those differences. Your comments will say something like... "It is common and accepted practice in the subject market to report all finished area, both above and below grade, as the square footage of the property. Buyers and Sellers in this market typically think in terms of total finished area. In the description sections of the appraisal report, the subject dwelling has been described in conformance with GSE requirements. In the sales comparison grid, the square footage of the subject dwelling has been reported in accordance with local market practice in order to facilitate direct comparisons and adjustment.'
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If you have comparable sales data that adequately breaks out finished/unfinished, above grade/below grade areas then, there is no need to jump through any hoops.

 

[sputnam]

Put GLA on the appropriate line. The non-GLA on the line below. If warranted then adjust BOTH at the same $ per unit. If comp is all GLA the one line adjusts up and the lower one down. The total adjustment gross is higher net is the same.

The issue is... when you don't know which is which for the comparables because the Realtors don't report it in appraiser friendly ways. Realtors.. and therefore, MLS... have no real interest in reporting GLA and non-GLA in appraiser friendly ways. They are marketing properties. In some places, public records only reports total basement area.

 

[Terrel L. Shields]

The issue is... when you don't know which is which for the comparables because the Realtors don't report it in appraiser friendly ways. Realtors.. and therefore, MLS... have no real interest in reporting GLA and non-GLA in appraiser friendly ways. They are marketing properties. In some places, public records only reports total basement area.

Most times the interior pix tell me what is finished or not. Here virtually all hillside lakeside properties are finished and sell as if 2 story. Away from the lake not so much. Significantly cheaper contribution to the lower level.

 

[Fernando]

Before ANSI, it was my discretion if I wanted to put above grade GLA under basement. especially with certain styles of homes in certain neighborhoods.
Appraiser gets to decide how to do the adjustments. I didn't have problem with client. Just be consistent.

 

[Dublin ohio]

Before ANSI, it was my discretion if I wanted to put above grade GLA under basement. especially with certain styles of homes in certain neighborhoods.

That "discretion" is more than likely one of the main reasons they adopted ANSI. Discretion was subjective and not consistent from one appraiser to another. Even today some appraiser's on the forum are still trying to invoke the Fannie exception that was eliminated with the adoption of ANSI

 

[RCA]

The issue is... when you don't know which is which for the comparables because the Realtors don't report it in appraiser friendly ways. Realtors.. and therefore, MLS... have no real interest in reporting GLA and non-GLA in appraiser friendly ways. They are marketing properties. In some places, public records only reports total basement area.

I imagine that even if there were regulations requiring realtors to make the necessary measurements and calculations - something that even many appraisers are incapable of - many would not have a clue as to what they should do. And even if they were required to go through training to make SF measurements of various types of areas, many would still screw things up.

No, you need to point your finger at the architects who create the plans and the planners who review the original plans and updates, as well as the supporting infrastructure used to report and transmit the plans and measurements to the tax assessor. In this area, there are many updates to older homes over the past decades that have not been properly reported back to the tax assessor, so for this reason, much of the MLS data is out of date. - In some areas, the calculation of living area has been taken out of the hand of planners ---> for tax purposes, and there is possible bias towards living area values that are larger than what is considered ANSI compliant (to wit, I have seen this in Berkeley, but have no idea how widespread the problem is).

Another comment: Because there are now so many Cubi Casa type plans available for homes, you can actually get very good estimates of detailed categories of building areas by looking at the plans. --- But that can take extra time - and what you get are just estimates based off Cubi Casa type reports. ( But good enough for regression.)

 

[sputnam]

Sure.. Interior pics are useful. They don't tell you the measurements of the pictured area.

 

[Tim Hicks (Texas)]

The issue is... when you don't know which is which for the comparables because the Realtors don't report it in appraiser friendly ways. Realtors.. and therefore, MLS... have no real interest in reporting GLA and non-GLA in appraiser friendly ways. They are marketing properties. In some places, public records only reports total basement area.

Don't the tax records separate them there. Here, the tax record will say first floor living area, second floor living area, basement area, etc in most counties. Notice the tax office and MLS do not say GLA, they only say "living area." They want more taxes and the agents want to market as bigger homes. It does not change how the appraiser should look at it.