What is above grade/below grade?

[Woodworker]

Where do I find, in writing, what we are to consider to be above grade living area and below grade. Such as... bilevel homes where part of the lower level is a few feet below grade but is finished to the same quality as the rest of the house. Is this a fannie mae guideline? I've always been told not to count the lower area as living area ever since the first class I ever took but was never told where that point started and stopped.

 

[Mr Rex]

Heres a copy of ANSI: Does Pennsylvania require adherance to ANSI standards?

http://www.kirchmeyer.com/CurrentNews/ANSI_SQFT_DOC.pdf

 

[Mike Kennedy]

FANNIE XI, 405.05: Gross Living Area (11/01/05)
The most common comparison for one-family properties (including units in PUD, condominium, or cooperative projects) is above-grade gross living area. The appraiser must be consistent when he or she calculates and reports the finished above-grade room count and the square feet of gross living area that is above-grade. For units in condominium or cooperative projects, the appraiser should use interior perimeter unit dimensions to calculate the gross living area. In all other instances, the appraiser should use the exterior building dimensions per floor to calculate the above-grade gross living area of a property.

Only finished above-grade areas should be used—garages and basements (including those that are partially above-grade) should not be included. We consider a level to be below-grade if any portion of it is below-grade—regardless of the quality of its “finish” or the window area of any room. Therefore, a walk-out basement with finished rooms would not be included in the above-grade room count.
Rooms that are not included in the above-grade room count may add substantially to the value of a property—particularly when the quality of the “finish” is high.

For that reason, the appraiser should report the basement or other partially below-grade areas separately and make appropriate adjustments for them on the “basement and finished areas below-grade” line in the “sales comparison analysis” grid.

To ensure consistency in the sales comparison analysis, the appraiser generally should compare above-grade areas to above-grade areas and below-grade areas to below-grade areas.

The appraiser may deviate from this approach if the style of the subject property or any of the comparables does not lend itself to such comparisons.

However, in such instances, he or she must explain the reason for the deviation and clearly describe the comparisons that were made.

 

[Bob Ipock]

Mr. Rex.

I assume you are aware that the NCAB does not recognize ANSI (nor any other standard) as required method of measurement.


(the following comment has been stolen from another appraier...it is correct)


So what does Fannie Mae say about this subject.

Calculating gross living are and gross building area, page 21.

"We consider that a level below grade (and, thus, not calculated as part of the gross living area) if any part of the level is below grade, regardless of the quality of the finish or presence of windows."

The article goes on to explain that if including the basement living area in Gross Living Area is "customary" in your area, "explain the basis for this conclusion in your report and be consistent in your comparisons in the sales grid."

What does this mean; It means don't count the subject (with a part of the basement in the ground) as a 2 story above grade; and then treat the comps (which also have part of the basement in the ground) as having basements; and then adjust the comps upward; thus arriving at an artificially inflated value.

 

[Mr Rex]

USPAP correct me if I'm wrong, but the NCAB doesn't require ANSI, but recognizes ANSI and the Realtors yellow book (Residential Square Footage Guidelines by the NCREC) as acceptable measuring standards.

 

[Bob Ipock]

That is correct. (note that I did use the word "required")

I was there for the moronic debate on why the NCAB should not require one standard or the other. Real estate agents, appraisers and especially MLS should all be using the same standard. Yellow book suits me...bit ANSI would be fine as well. Just have a standard method.

 

[Woodworker]

Thanks for the help! I printed it and will keep it for future reference.

 

[Terrel L. Shields]

Therefore, a walk-out basement with finished rooms would not be included in the above-grade room count.

To me a bi-level or tri-level is not a "basement" home. We don't have a lot of such homes but typically here they are built on small slopes and are completely sided, or in some instances have a taller cc block wall in the less visible portions, usually beneath a deck. No part of the home is beneath the original ground grade to any degree, but rather has a slab foundation which has two elevations - one standing on the upper elevation has a choice to go UP into a portion of the house or DOWN into a portion of the house or stay on the intermediate portion. The lower level is liking living room, den, etc. The upper level is likely bedrooms, and the intermediate level seems to commonly be the kitchen and dining area, utility, etc. The garage is usually on that level if the land sloped away from the street or beneath if sloped toward it. "Grade" is an ambigious term, and fannie doesn't specified if they mean the quality "grade" of the dwelling or the "Grade" of the foundation or the original earth contour "grade". Each has its own meaning.

Most walk out basement homes or Raised Ranch whatever, OTOH, in our area have a single slab poured in a cut into a slope and you walk in to the upper level. Usually, only this level has siding, and the lower level is generally concrete block, although it may stairstep down the slope to a degree.