USPAP -- Below Grade

[Greg Parker]

I need to get the book out to get my answer, but I have just been told that counting living area for a bi level (upper level 6/3/2, lower level family room, half bath with a garage comprising approx 40% of the total level) is a USPAP violation.

I agree that anything below grade should be considered a basement, but these are always counted as two level homes by the buyers, in the MLS and on county records.

I need a response, but I am fairly sure this is not a USPAP issue.

 

[Thomas Fiehler]

You are right in that USPAP does not address how to measure a house. Now, there are hundreds of threads dealing with this issue. My market area is similar as yours in that the buyers and Realtors treat the whole house as living area BUT that does not mean that I do. I try to follow ANSI guidelines in measuring a house (as well as FNMA) in that if any part of a level is below grade then the entire level is below grade. Also, you should check with your state and see if they have any regulations on this. I am licensed in KY. and Ohio. In KY, it is mandatory to adhere to ANSI. In Ohio, they have no guidelines in their law but their track record indicates that they adhere to the FNMA guidelines. I have a ranch with a full walkout basement (5-2-2) and when I finish the basement I will still have a 5-2-2 (even though a Realtor will call it a 3 bedroom/3 bathroom.)

 

[stefan olafson]

Has nothing to do with USPAP! Standard 2 has 11 items that must be addressed on each and every appraisal we complete (Self Contained, Summary, or Restricted).

Within those 11 items is one that refers back to standard 1 which is the development of the appraisal. In that development you have to correctly employ those approaches to value that you do usse, nothing about how you measure a house.

 

[Bill_FL]

This is one of those areas in which I think existing rules contradict what we should be doing. If buyers and sellers treat a 1500 sf house with a 1500sf full finished basement as all above grade 3000, shouldnt we? As long as we are comparing apples to apples and not a 1500sf with basement to a "real" 3000 sf two story?

I would measure and correctly identify the levels on the grid and in my comments. In some MLS's, the agents are very good about breaking down what each level has. In some areas, not so good. If I was in an area where they were all just listed as 3000sf, then I might, on the sales grid, show them that way and in my comments address that these are split level homes that the market treats as all above grade.

Just one of those things that I think we might do wrong if we are trying to analyze what the buyers do. I have seen areas where county records are not very good and ontop of that they assign the main level 100% of its space, then a garage gets 25% upper floor 50%, porches and decks 5%, etc. So a 1500 sf one level house is listed as say 1833sf. Every property in MLS is listed with that figure and that is the number that buyers and sellers use. So, why would we not do what the market does and talk about it?

Oh well, just my afternoon ramblings.

 

[Caterina Platt]

Following Fannie Mae requirements when applicable are a Supplemental Standard. USPAP says we must abide by these Supplemental Standards.

If the living area is below grade, it must be reflected on the basement line of the 1004. You will treat it as basement with whatever finish level is applicable, and adjust it per your market. This may indeed be adjusted at the same rate as above grade living area, but it's a requirement if this is going, or may eventually go Fannie Mae.

 

[stefan olafson]

YES, Fannie requirements are a Supplemental Standard, but nowhere in Fannie, that I know of, does it specifically tell us how to measure a house.

Granted below grade is not in GLA in my market, but MAYBE in some markets it's considered to be included.

It's not a USPAP violation and I don't think Fannie has any requirements regarding it either.

 

[Caterina Platt]

Stefan,

I hate to disagree, and I'm sure I can dig enough to find it in the Fannie Mae Handbook, but I think the first thing we should look at is the form right in front of us.

"Above grade Living Area" is right there.

 

[Lee Lansford]

I need to get the book out to get my answer, but I have just been told that counting living area for a bi level (upper level 6/3/2, lower level family room, half bath with a garage comprising approx 40% of the total level) is a USPAP violation.

I agree that anything below grade should be considered a basement, but these are always counted as two level homes by the buyers, in the MLS and on county records.

I need a response, but I am fairly sure this is not a USPAP issue.

USPAP does not specifically address the manner in which below-grade finished area is to be reported and analyzed.

The USPAP does, however, apply to your appraisal.

Tell us more about your specific situation (if there is a specific situation).

 

[The Bob]

The definition of Supplemental Standards was deleted in the current USPAP. This was done because GSE provide guidelines, not laws and regulations. You would still need to comply with their guidelines as long as doing so doesn't result in a mis-leading report.

As to how to handle this situtation, I have done it both ways. I agree with Bill Potts. Some localities I cover don't differntiate between the upper and lower levels of Bi Levels (Split Foyers), like they do with a more traditional basement. Remember these are guidelines, not hard and fast "rules". As long as you explain what your doing and why, I think its permissible to inlcude the lower level in the GLA for a Bi-Level. Sometimes you have to use common sense.

 

[Lawrence R.]

I was always taught.

Don't mislead the client. If the client could read your report and not know that part of the house is below grade, it is false and misleading.

What better place to disclose that than where you do your room count and sketch(GLA)?

You can then take a moment to explain that the market value (if such is the case) is the same in your market regardless of where it lies above/below grade.

Provided you have actual research to back that up....

I don't see how or why that should create problems for anyone.