Living Area Below Grade

[Ray Miller]

I've been getting e-mails that the Denver MLS is now officially listing walkouts as above grade (to avoid confusion ) and I've noticed that other listings around the state have been doing the same unofficially and not consistently.

Happening in some of the area I cover. Was told by a realtor they are doing that so the buyers are thinking gee, I am getting 3000 GLA for just a bit more then my sister paid for her 1500 GLA home last year.

What make it bad is half the realtors are listing below grade in the MLS and the other half only above grade. This is when you really need to drive the sales selected for comparables.

 

[CANative]

This is when you really need to drive the sales selected for comparables.

I agree to a certain extent, but so much depends on issues that must be judged based on knowledge of the interior.

These are always such a PIA. And you always have to make executive decisions when dealing with each one, because the circumstances are always different. You have to be consistent in the report, but you can't be consistent from assignment to assignment. It depends on the available comparables sales, the type of basement, the quality of the finish, the access, heating and fenestration. And then mix all that in with how the local building department or assessor reports property characteristics, how agents report the characteristics and how stupid or smart the agents are as they may or may not know that there is a difference much less knowing what the measurements are. You've also got a decision to make on how to report room counts on the various lines, especially bath counts.

And the problem with downward adjustments for GLA differences and then corresponding upward adjustments for the basement can be difficult because determing market reaction to differences in GLA expressed in dollar amounts is imprecise. And if the subjects below grade area has lesser quality finish or functional issues then you have to detrermine a lower dollar psf adjustment. This is especially so when portions of the basement have excellent finish and other rooms down there are not very well finished (store rooms, utility rooms, rooms at the grade which have been partitioned off and have no windows, etc.) Mix that up with uncertainty about the comparables finish quality of their basements or when you have to use comparables without basements, etc.

Fun stuff.

I'm reviewing a reprot right now of such a house. The appraiser called it a two story with 4200 sf of GLA. The photo clearly shows the back as below grade. Inspection from the street confirms this. The sketch is just one of those empty box perimeter sketches with room labels. It does not show interior access stairs. The rooms along the back grade are listed as "storage" and "utility."

 

[BOB PADRICK]

Here in Florida-where we usually just, "say what's a basement?", almost not county assessor lists areas designed to be living areas as basements. MLS, as a result, generally doesn't do so either. There are many homes that have back yards sloping towards lakes that have areas that might be considered up north to be basements. Here, nearly no one other than appraisers might call those same areas anything but GLA. As a result, and citing when necessary that same quote listed above, so do I. I try to get comparables with the same "defect", but that is nearly impossible to determine prior to going into the field. With MLS, Win2data, and public record all calling the "basements" as part of the GLA, I have no method of reliably breaking out the differences.

My personal favorite is the "2-story" home in this area, where you enter at ground level in the middle of the stairs-go right/down to the lower level/basement/living area, and you have a rec room, 2 bedrooms, and a bathroom, as well as the garage. turn left/up to the upper level, and you have the 1st floor/2nd floor, with the living room, kitchen, dining room, and 1 bedroom and 1 bathroom. Nobody in this area is buying this as a 1 bedroom 1 bath home. Nobody is marketing it that way. But according to a few underwriters, this is a 1 bedroom home with a basement.

I just write about market conditions and acceptance until they fall asleep or go away....works so far anyway!

 

[John Wilson]

Originally posted by Mike Geis@Dec 29 2005, 01:55 AM
"We understand that some markets consider a finished lower level area as living space. If this is the case, explain the basis for this conclusion in your report and be consistent in your comparisons in the sales comparison grid".

What does the assessor say?

If the assessor includes it as GLA, I include it. If they don't, I don't. Some of them do, some of them don't, it just depends.


Many area's around here include the lower levels of Split's and bi-levels when calculating total GLA.

 

[Mike Garrett RAA]

It makes no difference what the assessor, MLS, or anyone else says. Below grade is below grade and for Fannie Mae it is not to be included in the GLA. Now, if you want to, you can value it the same as the above grade...just report it correctly and explain what you did.

 

[John Wilson]

Originally posted by Mike Garrett@ RAA,Dec 30 2005, 03:17 PM
It makes no difference what the assessor, MLS, or anyone else says.  Below grade is below grade and for Fannie Mae it is not to be included in the GLA.  Now, if you want to, you can value it the same as the above grade...just report it correctly and explain what you did.

Right,

But if the subject is a split level and its "Total GLA" is reported by the assessor as say 2,200 sft, which is inclusive of a formal lower level, what square footage would you use for other split level comparables with similar lower levels?

In other words if the assessor is reporting "Total GLA" on your three split level comps of 2,200, 2,100, and 2,300, how do you determine what portion of that "Total GLA" goes in the basement without actually going iside each of them and measuring the lower levels?

How do you adjust?

 

[imran ahmed]

I agree that basements sq.ft should be noted at the basement section. too often
when appraising raisdranches the realtors will almost always include the basement
sq.ft as living area. but as appraiser we have to separate into above grade or finished basement section.

I vaguely remember a few years back, i appraised a property which had a unique
floor plan. as it looked like a ranch but had a walk out basement. first floor was
unique as it had 3 bedrooms and one bath on the first floor, and here's the kicker
the living room, kitchen and 1/2 bath were in the walk out basement.

So in any case it was one of those jobs, you wish someone else had it.

I ended up making it two story on a slab. but the point i am trying to make it is
appraising is an art not a exact science. it is all about how you package it.

 

[Mike Garrett RAA]

Good question John, I don't have that problem because our assessor's records and MLS presently reports it correctly. Most likely you would have to make some assumptions. What does you MLS say?

I personally think we, as appraisers, do not make our voices heard loud enough when it comes to MLS. I pay for a full membership in the board and use the service almost exclusively for appraisal. One of the members of the board of directors is an appraiser and my brother, an appraiser, is a past president.

Can you imagine what would happen if all of a sudden all the appraisers in an area refused to appraise properties under contract because they didn't have sufficient sold data on the MLS?

 

[John Wilson]

Originally posted by Mike Garrett, RAA@Dec 30 2005, 04:10 PM
Most likely you would have to make some assumptions. What does you MLS say?

We have pretty good on-line assessor data which will indicate if below grade areas of splits are included in the GLA.

The reported total GLA numbers are actually pretty acurate but they won't break out the above and below portions.

Anyone who has worked in Palatine has probably been in quite a few of those splits that have the kitchens, dining rooms, and living rooms on the lower level.

 

[ginna currie]

Brooklyn, NY is one of those areas where the first level of a brownstone, is a finsihed area that most likely is below or partially below grade and it is always counted in the GLA.