The explaining what you are doing is accurate, however, in Fannie Mae guidelines as well as FHA guidelines "Enter the number of stories above grade, including half stories, Do not include basements" and "Basement... may be partially or completely below grade... Do not count the basement in finished gross living area at the grade level." I do not think there is any way to make it clearer. I moved to SC from MN a few years ago and we ran into a lot of this problem. In MN almost every home has a full basement where as here is SC almost none of them do. We have a some high end Lake Front properties in the mountains with full walkout basements where the realtors have sold and still try to sell the homes as total Sq. Ft., the problem is, is that when they are placed on the open market, not sold by exclusive realtors to rich people from Chicago with money to burn, lol, the market data does not support the total Sq. Ft. idea. Plus if that were true, why could you not just break them down into above grade and below grade anyway, if the theory holds water then you should be able to locate similar homes. Down here it has cost buyers millions. The cost to finish basement is significantly less than finishing above grade Sq. Ft., I mean, you have to have a foundation either crawl space or basement, slab, etc. In the case of a basement, the plumbing, electrical, heat ducts, walls etc are already there to tap into, there is no roof to add, no additonal siding, etc. It is built into the cost of the above grade Sq. Ft. so from a cost approach as well as from Fannie Mae and FHA it is wrong to do.
