Is it GLA or Enclosed Patio?

[Randolph Kinney]

Randolph - I disagree with the following statement:

"It should have its heating and cooling from a common source with the rest of the home."

I agree that it must be heated, except for exempted areas and/or areas where heating or cooling is not typical.

There is nothing exempting an area of a home from GLA if it has a seperate legal heat source. IE say the original house has forced warm air heating and a large extension is added with baseboard hot water heating. This is quite common in my market...

Whatever is acceptable in your market. However, as Tim Hicks points out:

The enclosed patio needs to be equal to the main living area in finish to be counted as living area. Most enclosed patios are not equal to the main living area. Here is a simiple solution. If you can tell it is an enclosed patio, then so can everybody else. Then you should count it separately on the appraisal form. How you adjust the room is up to you and what the market supports.

I have inspected homes where an addition was made by enclosing the breeze way from the main house to the garage. You had to step down three steps into a new level that is flat concrete with carpeting from the original structure through the kitchen. This enclosed structure had its own separate heat source independent of the main structure.

The issue then, becomes not whether the room addition is habitable year round, but does it conform to the rest of the house in its finish and its functional utility. In my example, it clearly did not.

The original poster has a room without insulation whereas the rest of the house has insulation. Same utility and finish as the main structure?

 

[Abzntminded]

Just for the information, I've lived in a home in Long Beach, CA (cross section of Elm St & Willow/Long Beach Blvd. for those Californian appraisers who'd like to know) for around a year that had no heating nor cooling facility, yet had 4 genuine bedrooms and only 1 small full bath (functional absolescence). By the way, this home was my wife's grandpa's home. How would one rate that home in terms of heating/cooling definition to accomodate the total room counts and space as "living area"?

I did a purchase on Termino close to 10th in Long Beach a couple of years ago that had no heat - the original floor heater was removed for the extra square footage since the house was so small. They used plug-in baseboard heaters instead.

The home was obviously GLA without installed heat, the condition was noted, cost to cure was estimated and then used as an adjustment. The appraisal was as-is.

So yeah, Fannie wouldn't lend on it, and the sellers quickly had a FAU installed in the attic.

 

[ZZGAMAZZ]

I was told by a San Bernardino contractor recently that current building code requires all new residential units to include central FWA. If the appraiser calls out the absence of a heating source in a SFR, would the lender accept a wall heater rather than a full forced air system with ductwork, etc.

 

[Glen Gerber]

In my experience, and I am not saying it is right or wrong, but it has been acceptable to several lenders..........if it is borderline GLA and the homeowner is not currently using it as livable area, and rather is using it as a laundry room or storage or it has patio-type furniture....then I lean towards calling it enclosed space. I mean, if the homeowner isn't even truly using it as GLA, why should I count it as GLA?

BUT, on the other hand.......if the homeowner is obviously using it as everyday livable area, then I lean towards counting it as GLA. I mean, if the homeowner uses it as GLA, why should I not count it as GLA as well?

What I mean is if there is a lawnmower next to plastic patio chairs....probably not GLA.
But if a family member lives in it year round....probably GLA.

Another thing I look for is the door. If it is a nice french door or double french door, something nicer than a solid exterior type door.

I look at what is acceptable in that neighborhood or market area and how such areas are used.

Then in the end just explain the heck out of why you are or are not counting it as GLA, and why you are or are not making an adjustment in the adjustment grid.

 

[Mike Boyd]

I was told by a San Bernardino contractor recently that current building code requires all new residential units to include central FWA. If the appraiser calls out the absence of a heating source in a SFR, would the lender accept a wall heater rather than a full forced air system with ductwork, etc.

It may be a city or county code but requiring FWA heating system on all new construction but is certainly not state or nationally mandated. Moving air can exacerbate allergies and asthma attacks. Ask the contractor again. I think you may have misunderstood him.

 

[Abzntminded]

I don't think there's hardly any case where an enclosed porch should be included as GLA in an appraisal. In effect, you could be comparing a professionally built, permitted addition with proper foundation, insulation, structure, heat, etc. to something the last owner of my house might have slapped together (tear off the wallpaper and paint over the glue).

An enclosed porch (or a finished basement area) certainly can be adjusted for as an amenity, and I've compared like to like unpermitted living areas using porch/garage replacement cost.

In a market where unpermitted living areas clearly affect value as though they are permitted (such as a beachfront community of old bungalows where an enclosed porch seems to boost value as much as an addition) it might make sense to include it as GLA; otherwise, no.

 

[Tim Hicks (Texas)]

In my experience, and I am not saying it is right or wrong, but it has been acceptable to several lenders..........if it is borderline GLA and the homeowner is not currently using it as livable area, and rather is using it as a laundry room or storage or it has patio-type furniture....then I lean towards calling it enclosed space. I mean, if the homeowner isn't even truly using it as GLA, why should I count it as GLA?

BUT, on the other hand.......if the homeowner is obviously using it as everyday livable area, then I lean towards counting it as GLA. I mean, if the homeowner uses it as GLA, why should I not count it as GLA as well?

What I mean is if there is a lawnmower next to plastic patio chairs....probably not GLA.
But if a family member lives in it year round....probably GLA.

Another thing I look for is the door. If it is a nice french door or double french door, something nicer than a solid exterior type door.

I look at what is acceptable in that neighborhood or market area and how such areas are used.

Then in the end just explain the heck out of why you are or are not counting it as GLA, and why you are or are not making an adjustment in the adjustment grid.

This response is exactly what is wrong with this profession. Glen is not worried about the finish out, the quality of workmanship, heating source or proper appraisal practice. If the borrower has a chair or bed in there, then it must be living area?????

I appraised a 100 year old home on 10 acres with a giant screened patio with four beds on the patio for cool nights sleeping. Under this criteria, Glen would say the screened patio was living area because they choose to sleep out there.

WRONG, WRONG, WRONG!!!!

Never mislead the reader of any appraisal report. If it is an enclosed patio, count it as such! If the quality good, adjust according to that quality. Doing it any other way is misleading. Why would you not do it this way? To avoid exceeding guidelines in adjustments? You should attempt to find like/kind properties with similar enclosed patios. Rarely can I not find one. If you have like/kind properties then you will not exceed guidelines. If you don't, but exceed guidelines, big deal! They are just guidelines. You have addressed the enclosed patio properly in your report so the reader understands it is an enclosed patio.

Some reasons enclosed patios are usually never equal to the main living area:

1. Slope of the patio slab.

2. Former exterior walls and windows exposed in the enclosed patio room.

3. Different exterior than the main living area. It looks different in your pictures for goodness sake.

3. Former exterior doors are still usually present.

4. No central heat source connected to the main heat source.

5. Ceiling slope is usually different or a flat roof.

6. There is no exterior porch or patio anymore.

7. You need the enclosed patio to be GLA to make value.


It does not matter whether RE agents include it as living area. It does not matter if tax office taxes it as living area. It does not matter if skippy counted it as living area on their re-fi last year.

If you talk to the buyer, the seller or the borrower, they all recognize that it is an enclosed patio, but they all WANT you to count it as living area.

It matters that you report it and value it correctly. Never mislead the reader of the report.

Sorry, Glen. Just my opinion. You can disagree and be wrong all you want.

 

[KD247]

This response is exactly what is wrong with this profession.

Were you referring to Glen's response or your response? : )

It's almost always a mistake to over-analyze the label if it means ignoring the comparison.

The basic philosophy of appraising relies on judging properties relative to other properties, not making some theoretical absolute determination. (Unless you're loading the database for an AVM that will consider a Florida enclosed patio to be exactly the same as a Seattle enclosed patio.)

Deciding whether a room qualifies for the label of "Living Area" or "Bedroom" is far less important than insuring that the data can be reliably compared with other data in the local market.

Same with the "enclosed patio" label. There is a continuum of "enclosed patios" ranging from those with plastic roofs and plywood sheathing tacked on as walls, all the way up to those fully integrated "enclosed patios" that compliment the subject's floor plan and have heating/cooling, design, quality, and workmanship similar to the rest of the house. There's no correct answer as to exactly where the line between "enclosed patio" and "GLA" should be drawn. And if there were a correct answer, it would only apply to that specific market.

In terms of forming an opinion of value, deciding whether or not to consider the space as an enclosed patio or whether to include its area as GLA is far less important than analyzing and explaining how the space relates to comparable sales.

FNMA and specific lenders may have requirements that hinge on the labels we assign, but we shouldn't confuse the task of assigning labels with the task of forming an opinion of value.

 

[Tim Hicks (Texas)]

Were you referring to Glen's response or your response? : )

It's almost always a mistake to over-analyze the label if it means ignoring the comparison.

The basic philosophy of appraising relies on judging properties relative to other properties, not making some theoretical absolute determination. (Unless you're loading the database for an AVM that will consider a Florida enclosed patio to be exactly the same as a Seattle enclosed patio.)

Deciding whether a room qualifies for the label of "Living Area" or "Bedroom" is far less important than insuring that the data can be reliably compared with other data in the local market.

Same with the "enclosed patio" label. There is a continuum of "enclosed patios" ranging from those with plastic roofs and plywood sheathing tacked on as walls, all the way up to those fully integrated "enclosed patios" that compliment the subject's floor plan and have heating/cooling, design, quality, and workmanship similar to the rest of the house. There's no correct answer as to exactly where the line between "enclosed patio" and "GLA" should be drawn. And if there were a correct answer, it would only apply to that specific market.

In terms of forming an opinion of value, deciding whether or not to consider the space as an enclosed patio or whether to include its area as GLA is far less important than analyzing and explaining how the space relates to comparable sales.

FNMA and specific lenders may have requirements that hinge on the labels we assign, but we shouldn't confuse the task of assigning labels with the task of forming an opinion of value.

That's exactly what I am talking about. If it is so common in the area, then you should have comparable sales with and without the improvement. You are not ignoring comparable sales relative to the subject if they have similar enclosed patios. But, if you do not have three with similar enclosed patios, then you need a basis for the adjustment.

Lumping the room in with GLA and then comparing it to homes without similar enclosed patios is not forming a correct opinion of value. You are not assigning labels when it comes to correctly identifying the property. If you can tell it is an enclosed patio, the borrower and/or owner can tell it is an enclosed patio, then it is not a label. It is what it is. Too many appraisers want to take short cuts or avoid controversy by rationalizing an enclosed patio is included in the living area.

I know this from the appraisals I have reviewed, the properties I have appraised after another appraiser and the REO appraisals I have performed.

Maybe it is more of a geographical problem, but here in TX we see many types and styles of enclosed patios. Most are not the quality of the main living area. Occasionally, there is an enclosed patio finished so well that you can not tell where the original patio ends and the main living area begins. In those cases it is more of remodeled living area than an enclosed patio. In those cases, I have no problem with including it in the main living area because it is truly equal to the main living area.

As even you have stated, there are numerous levels of finish to enclosed patios and one should not consider all equal. That is more reason to make it a separate adjustment in the appraisal, so that one can make appropriate adjustments for the finish of each enclosed patio relative to the comparable sales and the finish of their enclosed patios.

Labling a room and its quality to properly value it is a good concept.

I would not argue this concept if I did not know for a fact that many enclosed patios of inferior quality are constantly lumped into GLA and compared to other homes similar in total area without this type of improvement. Many times it is pressure to hit value. Many times it is just how they were taught to do it. Other times it is just easier and less controversy for the appraiser to do it. If I can just help educate a few appraisers on this subject, maybe one day this will never be a problem again.

Besides, if you always address it as it is and value it correctly, it will never come back to haunt you.

 

[KD247]

In those cases, I have no problem with including it in the main living area because it is truly equal to the main living area.

We're on the same wavelength.

Whenever appraisers start talking about the definition of GLA, there's always the chance that some new appraiser is going to misinterpret the conversation and start thinking that all GLA is equal and that all non-GLA areas are worthless. In this case, I'd hate for someone to get the idea that the market reacts the same towards every enclosed patio.