Joan Trice: CRN – Gross Living Area Measuring Standards Announcement

[Tim Hicks (Texas)]

This is one of my clients guidelines: "in certain markets, finished basement/below grade areas may enjoy market acceptance as above-grade GLA. If finished basement/below grade area is being included in GLA, the appraiser must demonstrate market acceptance of this area as GLA by providing at least one similar comparable sale". There goes ANSI.

If you have at least one similar comparable, why not classify it properly and just adjust accordingly. That would seem the proper way to handle it. You have the market acceptance of another home with a basement so you have perfect comparable sale to do it the correct way.

 

[sputnam]

If you have at least one similar comparable, why not classify it properly and just adjust accordingly. That would seem the proper way to handle it. You have the market acceptance of another home with a basement so you have perfect comparable sale to do it the correct way.

You could... but here, it's a matter of available data. Split levels are the easiest example. MLS usually reports all of the finished area in a lump even when part of it is basement. Public records is almost useless if you care about the actual square footage. The easiest solution is report GLA as expected in the description of the subject and then report the subject in the same way that MLS does for the Sales Compaison Analysis. You then explain exactly what you did and that you did it in order to make apples to apples comparisons.

 

[Sid Holderly]

Using GLA on page 1 and MLS area listed area in the grid causes the software program to throw many red flags. You can shot off auto transfer on several fields and fill the form, but UAD checking will not pass, thus the AMC will not accept uploading, jsut creates a larger mess. Just make the UAD(error) reviewer within your software happy and add paragraphs of explanation for the bi's, tri's and other less common layouts. Then save one as a template to start from for other odd balls.

A better though out form would help, is one coming? The form makers did not think about what you find away from the cities. many Lake, mountainside and rural properties do not fit the curent form very well.

 

[Fernando]

View attachment 56842

This is 100% above grade. The market calls this a split, not a 2 story slab on grade. I don't care what the standard is, I'm not putting this on the grid as 2-story with a 0sf basement. Standards are nice, but at the end of the day it's the appraiser's call, and rightfully so IMO.

When I see this kind of style in a certain town, it can be a headache.
The downstairs rooms next to garage if done with permits are included in total gross area in assessors records.
Some are done without permits but looks fine built like original but not included in total assessors records.
MLS agents sometimes include the rooms downstairs into total gross area. I have to check to see if done with permits.
Have to look at all sources to figure out what was done to each comp. Ugh.

 

[Terrel L. Shields]

that it is REALLY the realtors and assessors (add builders in as well?) who ought to be getting a standard forced upon them.

Really, then it goes back to the architect and the blueprints. Rather than do that why not require all blueprints be filed in the courthouse. Then have it incorporated in the assessor records for everyone to use and take the responsibility of measurement out of the appraisers toolbox and put it where it belongs. Architects measurements are and should be the end all of measurement...and require builders to submit changes to the clerk's office.

 

[Fernando]

Really, then it goes back to the architect and the blueprints. Rather than do that why not require all blueprints be filed in the courthouse. Then have it incorporated in the assessor records for everyone to use and take the responsibility of measurement out of the appraisers toolbox and put it where it belongs. Architects measurements are and should be the end all of measurement...and require builders to submit changes to the clerk's office.

One time I saw a blue print. When I did the actual measurements, one wall was slightly longer by a foot.
Fooled the building inspectors and got larger home.

 

[Sid Holderly]

The blueprints presented for building permits often get cahnged and accepted at the county office but never seem to get posted further down the line. Room sizes are changed garages are made bigger, lofts above garages are finished, etc. The building inspector looks at building techniques and meeting regulations and not fine tooth combing the blue print for changes. In the Midwest permits are not required for everything and trying to find permits for anything more than a couple of years old would be impossible (you would have to look through boxes of records in a storage locker). They do not measure the house when the occupancy permit is given.

County data often does not have the living area updated when open, then enclosed , then heated and AC porches are added to the living area. The county lists all 1.5 and 1.25 story homes as having the same living area on the main and above floors. If an owner complains they will reduce the upper level to an appropriate living area. Open areas from the second to the main floor may or may not be listed correctly on the assessor card, that could be a 200 to over 500 sf difference.

On mass appraisal the discrepancies get averaged out, but on a home to home comparison differences can manifest into a significant value difference.

WE still need to measure, but a better description of what and how to measure would be helpful and a form that would allow better categorizing is needed.

At one time NAR recommended ANSI, if they choose another standard, the form better fit it.

 

[Terrel L. Shields]

Our assessors are fairly accurate even on half stories.

 

[RCA]

I would point out, and IMO appraisers should not be getting this wrong - as they use these definitions every day in their business:

1. ANSI Z765-2021 DOES NOT DEFINE GLA!!!!! In fact, you will find neither the word "gross" nor "living", nor the acronym "GLA" anywhere in the standard.

2. What ANSI Z765-2021 does define is above-grade finished area and below-grade finished area.

3. FNMA (as well as USPAP) can never seem to precisely define and use their terms. For all practical purposes, it gets things mixed up. So, FNMA does use the term "Gross Living Area" along with "above-grade gross living area" and "finished above-grade gross living area." And then you will always a find a long string of contradictions. Maybe they figure if they use precise language, then it will be too complicated for the readers to understand. Yea. Nevertheless, we are required to reword their 'rules' to make sense o f them.

3a. Let me be clear. FNMA states

"Gross Living Area​

The most common comparison for one-unit properties, including units in PUD, condo, or co-op 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. The need for consistency also applies from report to report. For example, when using the same transaction as a comparable sale in multiple reports, the room count and gross living area should not change.


When calculating gross living area

• The appraiser should use the exterior building dimensions per floor to calculate the above-grade gross living area of a property. (ummmm, you mean only SFR? Duplexes/Triplexes/Quads?)
• For units in condo or co-op projects, the appraiser should use interior perimeter unit dimensions to calculate the gross living area. (which contradicts the preceding)
• Garages and basements, including those that are partially above-grade, must not be included in the above-grade room count.

Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area. Fannie Mae considers 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 & Finished Rooms Below-Grade line in the Sales Comparison Approach adjustment grid.

For consistency in the sales comparison analysis, the appraiser should compare above-grade areas to above-grade areas and below-grade areas to below-grade areas. The appraiser may need to deviate from this approach if the style of the subject property or any of the comparables does not lend itself to such comparisons. For example, a property built into the side of a hill where the lower level is significantly out of ground, the interior finish is equal throughout the house, and the flow and function of the layout is accepted by the local market, may require the gross living area to include both levels. However, in such instances, the appraiser must be consistent throughout the appraisal in his or her analysis and explain the reason for the deviation, clearly describing the comparisons that were made."

So, someone said that "by definition" "FNMA states that GLA is above-grade." That is clearly false. GLA can include partially below grade. - And in my area where there are very many houses built on hillsides, that is quite common.

As I have already stated in other threads, even the latest ANSI Z765-2021 can't get things right and in one paragraph states that the area of a stair descending from the above grade main flow to a below-grade basement should be included in the above-graded finished area and in the next paragraph states that it can never be included in the above-grade finished area.\

Now, if we assume that ANSI Z765-2021's definition of "above-grade finished area" is the same as "gross living area", then we are still left with a contradiction between FNMA's exception to its first definition of GLA for partially below grade gross living areas backing into a hill (etc.) and ANSI Z765-2021.

It's all a genuine mess.

Therefore, touch base with these so-called standards and make a REASONABLE interpretation, eliminating contradictions, and you should be good to go.

THE APPRAISER SETS THE FINAL STANDARD, WHEN THE REGULATION STANDARDS ARE CONTRADICTORY.

 

[RCA]

I should mention, around here, especially in cities like Daly City where you find very many "Doelger Style" homes, the so-called "basement" is often completely above grade:

Doelger Architecture

Various styles of Henry Doelger homes in San Francisco

outsidelands.org

Not just Daly City. Try Berkeley and its $2M+, $3M+, $4M+, $5M+ homes. Oh wait a second, Bekeley is even classifying below grade as above grade. Oh my.


"Those easy-to-build floor plans often put all of the living space upstairs while the downstairs remained open as a basement or a garage."

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