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Split-Level Appraisal

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natasha

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Mar 3, 2008
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Massachusetts
I realize this must be a common problem, but I'm in the process of buying a home which is a split-level and the appraisal came in yesterday well below the agreed-upon price for the house.

Now, I've looked at the report and none of the comps used were split-levels. The lower level of the house was called a "75% finished basement" even though it has a family room, 2 bedrooms, and a full bath. There were no adjustments made to accomodate this. Two of the comps were ranches with "75% finished basements" but those basements were just basements -- not living area. The house is actually quite large with the two levels, but the appraisal only looked at the top level so the square footage was way low.

Does this seem reasonable? I knew that square footage would be an issue with a split-level but I thought there would at least be some adjustments for the bedrooms and full bath on the lower level...

Here are some pictures of the house in question:

Front:


Back:
 
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The Matrix

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Apr 28, 2003
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Certified General Appraiser
State
Colorado
My understanding is that the home in the picture is a bi-level. If you enter the home and there is a landing with one set of stairs going up and one set of stairs going down..then the home technically would be described as a bi-level. It is also very similar to a raised ranch.... A split level or a tri-level has three levels... a main level, an upper level, and a lower level...sometimes split levels also have a basement...then they are called 4-level homes.
 

natasha

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Massachusetts
I guess it's a bi-level then. In this area, they're all referred to as split-levels, but by your description it qualifies more as a "bi-level".
 

3 Putt

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Aug 18, 2005
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Certified General Appraiser
State
Ohio
If the appraised value is well below the sales price, maybe you have an honest appraiser telling it like it is. Take that as a blessing and either renegotiate or move on.

As far as the square footage, the appraiser can only use what is "above" grade. Any portion that is the slightest bit below ground is considered below grade. If you look on the report, you will see that the square footage area notes above grade only. In fact, this confuses so many people that the word above was placed in bold letters.
 

Bill_FL

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Aug 23, 2002
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Certified General Appraiser
State
Florida
Natasha,

Typicaly, we use a definintion of Gross Living Area that is published by ANSI and FNMA also publishes a very similar one. Gross living area is (not a quote, but paraphrasing here) the heated area that is 100% above grade. Any level that has any portion below grade is considered a basement. It does not matter how much is below grade. So, looking at your picutre, see how part of the lower level is underground? That is "below grade". So, that entire lower level is technically a basement. The appraiser is correct in only indentifying the upper level as the gross living area, or square footage.
 

TC

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Jan 31, 2002
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Certified Residential Appraiser
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Pennsylvania
In my market that is a split entry home with a finished basement. A split level home is what Mr. Matrix described.

TC
 

Frank Lostracco

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Mar 13, 2003
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Certified Residential Appraiser
State
New Jersey
The house pictured is a bi-level, and the lower level is considered basement. Ideally the comparables should also be bi-levels, because the lower level tends to have a higher market value then a standard finished basement. (In my market)
 

Restrain

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Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
The upper level would typically be "above-grade", while the area going down, as it is partially below grade, would be basement per standard appraisal guidelines. The appraisal should consider similar properties. Using standard single-story ranchers would generally not be appropriate due to the design features.

Hope this helps.
 

natasha

Thread Starter
Freshman Member
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Mar 3, 2008
Professional Status
General Public
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Massachusetts
Thanks to everyone for your responses.

I understand how living area (sq. ft.) is only counted above grade, but what about the extra rooms in the "basement"? Like I said before, there are 2 extra bedrooms and a full bath in addition to the family room that non-split-entry houses typically have in a finished basement. Do those really not add any value at all to the house?
 

Bill_FL

Senior Member
Joined
Aug 23, 2002
Professional Status
Certified General Appraiser
State
Florida
Natasha, yes, finished area below grade, be it in a split-foyer type house, which has several names depending on the area of the country you in, or a regular ranch style house with a basement, will typically add value. It is simply not added into the square footage of the home. It is handled differently. If you have a copy of the appraisal, a line or two down from where you see the square footage, on the sales grid, you will see two lines for basement and finished area below grade. That is where the value for those areas are considered.
 
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