Raised ranch homes-western New York

[Hassan Nesredin]

I know this has come up a few times however I cannot seem to find a thread that properly asseses the issue. I am shadowing a very experienced appraiser who seems very knowledgeable about appraising homes. The other day we visited a raised ranch home for an appraisal and the discussion came up about the proper square footage on a raised ranch home. Just to give you some details on this property, it is 100% above grade with no portion of the residence being below grade. The appraiser stated the bottom portion of the residence will always be considered a basement and would not count towards the GLA despite the fact that it is above grade. The "above grade" portion the appraiser used was 987sq/ft however if the bottoms portion were to be used, the total square footage would have been 1,600 sq/ft.

In addition, the city/county assessment indicates the sq/ft is 1,600 sq/ft. I do not understand why there is no uniformity when it comes to assessing raised ranches. The criteria on GLA seems very clear "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."

I do not see how this is still an issue with no clarity. I do not see this being a major issue for new homeowners however when it comes to reassessing a property for removal of PMI, I can see this being controversial because the city and county are taxing you at a higher rate based on the highter sq/ft however the investor is stating the appraisal is based on the lower sq/ft.

Can someone please shed some light on what the correct procedure would be?

 

[Terrel L. Shields]

Pick and choose... I don't use the term "raised" ranch here. And a ranch style to me is a one story, zero basement home with a low pitch roof (less than 6:12 pitch) And most of my peers here would say so. A pix would help but from the internet a pix below... We call that a bi-level here. And if you walk into the upper level, or some intermediate level, then I agree with your mentor. It is a basement, or treated as a basement. Just explain it. AND the principle of "purity of application" suggests you should treat your comps the same way. So if you want to say it is GLA, fine, but treat the comps that way, too. It is really a judgment call. They are my least favorite house style and if I had to live there, I wouldn't give $100 for the best one in town...but in my local towns there probably aren't 40 such styles left. Nobody builds them and only a few were built back in the 60-70s. I can think of only 2 that I've appraised that style in the past 20 years.

 

[norapp]

If any portion is below grade than it is a basement. I now live in Upstate NY and have found areas where the whole house was above grade with lower level finished. Some towns/counties have the entire GLA listed as above grade for taxable purpose and some don't. On Long Island it was always listed as above grade. Most realtors will list all of the home as above grade. If it is all above grade I tend to follow what is the norm for the area. If my comps are the same and it's only the second floor that is listed on TR as GLA than I will stay at that to be consistent. I do not agree with your mentor that it is always a basement. If unfinished I would call it a basement. If finished with full size windows I would make an adjustment against comps with normal basement windows and fully below grade. To me it is a functional issue due to how the basement may be used. You can utilize rooms as bedrooms because there is adequate egress and natural light.

 

[Carnivore]

The important thing to remember is apples to apples / oranges to oranges comparison. Its better to go back in time and use a Comparable SAle that looks like your subject than monkey around with trying to extract adjustments. Yes, I know Lender's get hung up on 6 months, one mile BS ...just ignore them and explain why you did what you did.

This is a little helpful, but doesn't really answer your question. This is also a Good reference for you in future work

FNMA Selling Guide: https://www.fanniemae.com/content/guide/selling/b4/1.3/05.html

FHA Handbook: https://www.HUD.gov/program_offices/housing/sfh/handbook_4000-1

Since your in western New York here is another good resource for you

https://www.rd.usda.gov/files/3555-1chapter12.pdf

 

[Tom4value]

Ok, first let’s differentiate between a raised ranch and a split-level. Both realtors and appraisers incorrectly say the terms are the same. In a split level you enter the front door (usually slightly above grade) and you are faced with stairs that go up to the main living area or down to the basement area. The basement can be finished or unfinished and partially below grade or 100% above grade. The main living area consists of the living, kitchen, bath(s) and bedrooms.

A raised ranch is where you walk in the front door and you are at the basement level. There is one staircase that goes a full story up to the main living area. Since it has a very similar functional utility as a split-level, people tend to use the terms interchangeably.

Getting back to your main question, Fannie and Freddie state that of the entire level is above grade, count it into the GLA and room count and if even a portion is below grade, don’t. If you have the former situation, try and find comps with the same situation. if you can’t, least find split or r.r. comps with the lower level only partially below grade, with full size windows and a walk out door. Add the finished area into the gross area and room count.....AND EXPLAIN IT. That way you are comparing similar functional utility.

 

[Jim Scholl]

I know this has come up a few times however I cannot seem to find a thread that properly asseses the issue. I am shadowing a very experienced appraiser who seems very knowledgeable about appraising homes. The other day we visited a raised ranch home for an appraisal and the discussion came up about the proper square footage on a raised ranch home. Just to give you some details on this property, it is 100% above grade with no portion of the residence being below grade. The appraiser stated the bottom portion of the residence will always be considered a basement and would not count towards the GLA despite the fact that it is above grade. The "above grade" portion the appraiser used was 987sq/ft however if the bottoms portion were to be used, the total square footage would have been 1,600 sq/ft.

In addition, the city/county assessment indicates the sq/ft is 1,600 sq/ft. I do not understand why there is no uniformity when it comes to assessing raised ranches. The criteria on GLA seems very clear "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."

I do not see how this is still an issue with no clarity. I do not see this being a major issue for new homeowners however when it comes to reassessing a property for removal of PMI, I can see this being controversial because the city and county are taxing you at a higher rate based on the highter sq/ft however the investor is stating the appraisal is based on the lower sq/ft.

Can someone please shed some light on what the correct procedure would be?

I am very late to this discussion. Sorry. The issue here is a regional one and in my area the lower level if finished is considered sf by assessors, real estate agents, and appraisers. The regulators sometimes have a different take on this but if questioned will acknowledge the appraiser must provide an "apples to apples" appraisal and they are aware of regional differences. I have had this conversation with a GSE and the QC at a "big bank". When appraising one of these styles explain what you are doing and why. Regarding the appraiser you are shadowing I understand his statement but respectfully disagree with it. If the lower floor is finished then it is square footage and the assessor agrees. Since it is also above grade I am puzzled why this is even a question. If appraisers are using one standard, assessors another and agents something else it would be a mess. While we all understand there is a desire for for some national standard like ansi or something similar currently many regions go their own way. Your best approach is to disclose, explain and follow your local standards.

 

[Mike Kennedy]

Evolution - in this Neck O' the Woods:

1940s-50s 1 story Ranch on slab
1950s-60s 1 story Ranch on crawl

1960s-70s 1 story Raised Ranch (one side 3-4 feet high abv grade) over Unfin or Finished Full basement level (front, back, 1 one side below grade) other side 1 or 2 car basement garage

80s-90s-2000s 2 story Raised Ranch no basement level - both levels/all 4 sides entirely above grade/on slab (aka Bi-Level)

 

[Jim Scholl]

Evolution - in this Neck O' the Woods:

1940s-50s 1 story Ranch on slab
1950s-60s 1 story Ranch on crawl
1960s-70s 1 story Raised Ranch (one side 3-4 feet high) over Unfin Full basement possibly 1 or 2 car basement garage (front and back below grade)
80s-90s-2000s 2 story Raised Ranch no basement level - both levels entirely above grade/on slab (aka Bi-Level)

1940s-50s 1 story Ranch on slab?? Mike how old are you?

 

[Mike Kennedy]

1940s-50s 1 story Ranch on slab?? Mike how old are you?

ancient (66) p.s. Woodstock Lives!!!!!

 

[Joyce Potts]

I am very late to this discussion. Sorry. The issue here is a regional one and in my area the lower level if finished is considered sf by assessors, real estate agents, and appraisers. The regulators sometimes have a different take on this but if questioned will acknowledge the appraiser must provide an "apples to apples" appraisal and they are aware of regional differences. I have had this conversation with a GSE and the QC at a "big bank". When appraising one of these styles explain what you are doing and why. Regarding the appraiser you are shadowing I understand his statement but respectfully disagree with it. If the lower floor is finished then it is square footage and the assessor agrees. Since it is also above grade I am puzzled why this is even a question. If appraisers are using one standard, assessors another and agents something else it would be a mess. While we all understand there is a desire for for some national standard like ansi or something similar currently many regions go their own way. Your best approach is to disclose, explain and follow your local standards.

I rarely think there is ever the 'right' answer across the board in all cases. It depends on your market. If the Realtors, county assessors, public-at-large are not counting that above-grade basement area, especially when the kitchen, living and bedrooms are on the upper floor, then go with whatever the market dictates. I don't agree that ANSI or its interpretation by countless of appraisers that often differ is a main source. As always, do what you say and say what you do. Explain how and why you determined the GLA, how and why you determined the lower 'basement', although not below grade (in whole or in part) was or was not included and how your adjustments are supported.

If you have confidence in your experienced mentor, ask him how and why he determines it the way he does, and assuming he's got some longevity behind him, I would think that would be a credible source to at least start with. If later on, you're out on your own and elect to do it differently, that's your business, professional and personal call.