Walk Out Basement With All Beds & Baths

[Blueprint]

I have read through the threads, but I am not finding the situation I am dealing with. I will admit, I am new to basements and this is my first appraisal where the lower level, which is technically a walk out basement with multiple doors where you can walk out, fully functions as GLA in the subject's market.

The lower level is referred to as basement in public record, but is also valued as GLA in public record. The total GLA per public record, includes the lower level.

For the gist, it is a 2 Story SFR where one side of the lower level is partially below grade. The side of the lower level which is partially below grade has multiple bedrooms and each have full normal size windows at normal standard heights from the floor. Essentially, all rooms on the lower level have normal windows which allow for easy exit if needed.

The lower level is cinder block and the upper level is wood frame. The lower level consists of all of the bedrooms, all of the full bathrooms and a family room. The upper level consists of the kitchen, dining room, living room and a half bath. With all the beds and full baths on the lower level, it clearly functions as living space.

If I had comps like the subject, this would not be a concern. The problem is I don't have comps where the lower level is partially below grade.

I have talked to quite a few potential buyers and agents and there is no question the lower level has equivalent value as the upper level in the subject's market. I would like to treat the lower level as above grade, but I know I can't technically do that!! I just don't know how to grid this out when comparing it to similar sized 2-Story homes which would be considered good alternatives, yet are all above grade.

Do I have to put the bedrooms, baths & GLA of the lower level in the below grade section of the sale grid? If I do, I don't understand how I can compare it to all the comps which technically have all beds and baths & GLA above grade!!

If anybody can help me as to how I can compare the subject to SFR's which are all above grade in the sales grid, I would sincerely appreciate it. Obviously this can be done, I just don't know how. :icon_lol:

 

[Blueprint]

To the right is the side that is partially below grade, you can see the windows on all sides and you can see to the left that the rest of the level is above grade.

 

[VolcanoLvr]

Howdy Blue...

Your situation is one I encounter fairly regularly, so I have this statement in my report and use this technique if necessary:

Comps with daylight basements:
In this area, homes with daylight basements are marketed in the MLS as having combined living space with the main level(s) of the dwelling. These homes compete with 1.5, 2 story, and Bi/Tri level designs due to internal stairs between levels. There does not seem to be any adverse buyer reaction to daylight basement style homes, especially when the finish in the basement is similar to the main level. Therefore, for the purposes of this report, the main and the basement level living spaces are combined to report the GLA and room counts. This is an acceptable appraisal method in this area, and does not adversely affect the OMV as reported.

There is no hard/fast 'regulation' that mandates separating living spaces into GLA/Basement as you describe (and I encounter) when there are no basement design comps, but there are plenty of multi-story above grade comps. So you CAN 'technically' combine the livings spaces and room counts on the GLA line in order to do the appraisal.

While it's true the form is designed to separate above/below grade, and F/F prefer it that way, the truth is black and white does not always exist. Therefore shades of gray have to be employed. But then, you just need to explain what you have done in a way that makes sense .... which you basically did in your post. Marketability may not be affected with living space cut into the hillside (where this situation normally occurs).

When I use this technique, I put the words '**Incl. Above' on the basement lines in the grid, and show combined room count. On the Design line above, I put '1B Story**' The above comment in the report explains why I did that.

WARNING..........there may be some appraisers who add posts basically saying I'm full of it. Ask them to produce the specific requirements that say we appraisers CAN'T DO what I do when necessary, and have never been challenged.

So to use the famous Nike phrase from your state........Just Do It! But defend your reasoning and application in the report.

 

[BRCJR]

I have done as post 3 in the past.

It all goes to explaining and supporting your reasoning, if your reasoning is supported, of course.

If you do those things properly, you have misled no one, whatsoever.

I see designs, in my market, if you did not include both levels as GLA you might be considered incompetent.

 

[Green Hornet]

In addition to what Dave and BRCJR said, I also research how many similar improvments are within the subject's neighborhood and explain that non have sold within X months/years. This does raise he question about why non have sold. Were there any listings? etc. I would also do a comparison of prior sales and compare DOM and sale prices of improvements similar to the subject vs typical 1.5/2 stories. To show marketability, I would toss in an extra comp of a similar, dated sale.

 

[Metamorphic]

Comps with daylight basements:
In this area, homes with daylight basements are marketed in the MLS as having combined living space with the main level(s) of the dwelling. These homes compete with 1.5, 2 story, and Bi/Tri level designs due to internal stairs between levels. There does not seem to be any adverse buyer reaction to daylight basement style homes, especially when the finish in the basement is similar to the main level. Therefore, for the purposes of this report, the main and the basement level living spaces are combined to report the GLA and room counts. This is an acceptable appraisal method in this area, and does not adversely affect the OMV as reported.

Very nice Dave!

I just copied that to my Appraisal Style Book.

 

[PropertyEconomics]

I believe Mr. Towne has it exactly correct. Very nice Dave.

 

[The Warrior Monk]

Finished basements are fairly common where I work. Everything from completely below-grade to walk-out is seen.

I consider the areas separately, which is reflective of the market. The only circumstance where below-grade area might be included is when it is essential to the function of the home. For example, the main entrance on the lower level of a hillside home is essential to the overall function, and I would include it.

I would be leery of include the basement shown in the overall GLA, especially with no market data to support it. The cost of construction is less than the above grade area (block basement and slab versus frame). If the return in the market is the same as the above grade area, it's just common sense that finished basements of this type would be extremely common to this market area.

 

[DMZwerg]

Assuming the upstairs and basement are finished to the same quality I see two options:

1. 1.5 story on a slab (counting only the finished areas of the basement);
2. Finished basement adjusted to nearly the same $/sf adjustment.

I think Mr. Towne covered the first case well enough, just I emphasize "slab foundation" as there could be a difference between "slab" and "crawl space" foundations

In the 2nd case, if comparing to properties without basements you need to only explain and support your basement adjustment. If you have basements but no walk-out and said basements tend to be finished to the same quality then you have to determine what adjustment for walk-out, etc., and it gets more complicated.

Hope that helps some!

 

[Blueprint]

Dave Towne,
Thanks so much for the detailed reply. I have employed your technique for this appraisal and wrote a book of commentary explaining the reasoning. I hope you don't mind, but I did use some of your daylight basement comments.
Even though the comps are not so great, it ended up working out better than expected and was ultimately able to find an older comp with a daylight basement which functions as GLA like the subject.
Thanks to everyone else also for the feedback. It is nice to see some consistency on this topic. I was honestly expecting to get a slew of varying answers!!