When you marry GLA with a Daylight Bsmt?

[prasercat]

Ok, we'll it's a hybrid thing and I'm curious to know how others would handle this situation.

Take a ranch backed it into a hillside, so the backside is completely submerged, the floor is slab. This type of home has living space characteristics of both GLA (such as a roof, vaulted in this case, and it walks out with full daylight and stick -frame at the one side) and it has characteristics of a daylight basement, such as, a slab floor, part of the structure is submerged concrete walls against a hillside and walks out to full daylight at one side).

However, that isn't what I have exactly, but that is essentially the problem.

What I have is a ranch on a hillside with a full daylight walkout basement, so stick frame over 100% of the backs side. The ODD THING is the center of the house, where the GLA is supposed to be, is missing. Ok, the design leaves the center area of the daylight walkout basement open to the first floor above, so you can look down from the first floor of this ranch and it feels like you are on the second story of a house looking down into a family room with a two story wall of windows. An open stair from the first floor foyer area provides access to the family room and "basement". It is truly a mind blowing sensation to feel like you are in a two story house only to walk to adjacent rooms from the family room in to what you would normally consider a basement without changing floor level. I think the architect just wanted to play mind games with appraisers.

The design is mid-century modern, with vaulted beamed ceilings through out, which includes the family room "Basement". I never thought I say a basement family room has as 17 foot to 19 foot vaulted ceiling that is the roof of the house.

From a valuation perspective, it appears the family room to be a hybrid and would be intermediate in valuation in the market. Therefore, whether it is represented as GLA or as finished daylight walkout basement, it would not be an accurate qualification.

I'm considering putting this daylight basement family room into GLA; however, then I'll have two rectangular areas for the basement that are separated by more than 20 feet with nothing connecting them in between - pretty wild eh! Honestly, I'm vacillating.

I'm doing this for a seller, so I don't have to worry about GSE matters.

It seems that the 17' to 19' vaulted ceilings for this family room offer (which are also a roof) should be a quality and appeal offset for it being in a daylight basement, so perhaps it can be incorporated into the GLA without further adjustments in comparisons - although, the basement sketch will look problematic. It is basically, taking the "sunken living/family room" concept to a whole different level; as in, a whole different level.

How would you handle the footage issue? Your thoughts would be greatly appreciated!

 

[Tom Woolford]

I can't visualize what you are explaining. Picture or sketch please?

 

[prasercat]

Ok, here is the daylight walkout basement family room from the foyer and an angle looking up the stair to the first floor from the family room:






This is the front of the ranch with daylight walkout basement:

 

[Michigan CG]

I am a big believer in being consistent in everything I do and go by ANSI standards. However it is sometimes that one must use the forth approach to appraising and that is common sense. Sit on the curb and ask yourself if the market would treat this as comparable to an all above grade property.

I would still report it as a house with a basement no matter what you decide but the lower level can have the same value as the upper level. Explain, explain, explain.

 

[prasercat]

I am a big believer in being consistent in everything I do and go by ANSI standards. However it is sometimes that one must use the forth approach to appraising and that is common sense. Sit on the curb and ask yourself if the market would treat this as comparable to an all above grade property.

I would still report it as a house with a basement no matter what you decide but the lower level can have the same value as the upper level. Explain, explain, explain.

I believe the market will look at the daylight basement family room as "GLA"; however, once they walk beyond the family room on the basement level, either to the north, where there are two bedrooms and a bath, or to the south, where there is another multipurpose room and walkout to patio, it will feel like a daylight walkout basement. So, the market should value these areas on the same level quite differently, in my opinion.

Therefore, the basement level has the peculiar ability to transport one in and out of a basement and GLA by traveling horizontally. I wouldn't value the other parts of the daylight basement similar to GLA, but I'm more and more inclined to value the family room as GLA given the appeal and ceiling height and roof above, which is likely a good approximation to offset the partially submerged basement and slab floor.

However, this puts the kitchen and dining room a flight of stairs above the family room, which is a design oddity - I would think most older people (or those with physical limitations), would certainly object. The only thing else on the main level is two beds and a bath (dated design beyond the family room issue). On the positive side, this design does create a dramatic two story windowed wall and tall ceiling above the family room that one would not expect in a ranch home.

If the entire house was like the family room, I think it would be easier to deal with, since at least the home would be consistent.

 

[Terrel L. Shields]

It's a basement. Period.

 

[Tim Hicks (Texas)]

Above grade and below grade. How you value it is up to you. However, I never take the easy route. Report it as it is and let the lender/client guidelines be damned. It is better to be truthful and not mislead any future reader of the report as to the true physical characteristics. It is what it is. An ugly report reported properly is better than a pretty report that is misleading.

 

[prasercat]

Above grade and below grade. How you value it is up to you. However, I never take the easy route. Report it as it is and let the lender/client guidelines be damned. It is better to be truthful and not mislead any future reader of the report as to the true physical characteristics. It is what it is. An ugly report reported properly is better than a pretty report that is misleading.

I agree with you 100%. Now If I could just figure out what exactly it is that I need to report.

If the entire house was like the family room, that is, one story, 17' to 19' beamed vaulted ceilings & roof, slab floor, backed into the hillside like a daylight basement so it is fully submerged on one side (50% submerged, about 50% stick frame, on grade at the walkout side). I'd call it GLA, because I believe that is how buyers would see it. It may have no windows on one side, but I have personally owned a detached home that was a two story with no windows on one side.

I would look at the total cost/quality of this design in comparison to the comparables for adjustment purposes as well. Slab is a lower quality element as is concrete walls for 50% of the structure, the high ceiling heights would be a positive. The design overall would be inferior to a house just like it above grade on all sides, etc.

Anyway, that's how I see it at this point, I would never try to mislead anyone and I'm not one to make large brush strokes in appraisals, I'm very detailed in my analyses.

 

[Mike Kennedy]

"Evaluating Above-Grade Room Count
The most common comparison for one-unit properties is the above-grade gross living area.
Appraisers must be consistent when calculating and reporting finished above-grade room count and square footage for the gross living area above-grade.
Part B, Origination Through Closing
Subpart 4, Underwriting Property
Chapter 1, Appraisal Guidelines, Appraisal Report Assessment
January 17, 2013
Printed copies may not be the most current version. For the most current version, go to the online version at
https://www.fanniemae.com/singlefamily/originating-underwriting 573

A level is considered below-grade if any portion of it is below-grade—regardless of the quality of its finish or the window area of any room. A walk-out basement with finished rooms would not be included in the above-grade room count.

The following must be observed when calculating and reporting above-grade room count and square footage for the gross living area:
• Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area.
• Garages and basements, including those that are partially above-grade, must not be included in the above-grade room count.
Below-Grade Areas
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.
The appraiser must 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.

Appropriate Above-Grade and Below-Grade Comparisons
To ensure consistency in the sales comparison analysis, appraisers must compare above-grade areas to above-grade areas and below-grade areas to below-grade areas. Appraisers 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, the appraiser must explain the reason for the deviation and clearly describe the comparisons that were made."

Reader summary:

Q. When Fannie applies, can I combine clearly below grade (either fully or partially) finished basement area and distinctly above grade finished area in the Gross Living Area above grade estimate?

A. Per Fannie above:
No
No
No
No
Oh what the hell g'head (when ya need to double the GLA to hit the $Bullseye), it's alright, really - we were just kidding with the first 4 No answers. Scout's Honor, We Swear.

-------
WARNING: Intentionally misrepresenting site improvements has been a major cause for inflation of home values. Forensic Attorneys, Major Banks ordering Retro Reviews on "push-back" loans hunting for scalps........including YOURS .......chomp at the bit when a 1,000sf Ranch was appraised as a 2,000sf "two story something or other" at $200. psf.

There is absolutely no reason to lie. When a market pays the same $sf for below grade finished basements as they do for Above Grade GLA (assuming the basements are constructed, finished, heated, insulated, etc. to a similar degree)........simply depict exactly what the lower level is (photos, sketch, comments) extract contributory residual value adjustments from directly competitive homes with similar finished basements, and sleep at night for the next 10 years. Many appraisers "conversing" with the FDIC and their E&O insurance providers now - based on their voluntary actions in the past 10 years - cannot sleep. Rightly so.

A guideline is a guideline. The USPAP, State Appraisal Laws (where they exist), the SOW decision including "acceptable assignment conditions" which require "accurately" describing a subject foist that responsibility upon the Appraiser.

"because Fannie said we could" will be proven to be many appraisers' "last ditch effort comment" as they are escorted out of the business - and worse (see below).

There was a reason FANNIE added Certification 25 to their report forms. Recommended reading each and every time you open a new file for a new assignment.

Have a Fun, Safe 4th of July.

p.s. In 2003 I attended a regional Hudson Valley 203K CE seminar in a hotel conference room filled to capacity with 200 or so Contractors, Realtors, Building Inspectors, Investors, Assessors, and Appraisers. This topic consumed over 1 full hour of heated discussion. I raised my hand, stood up and informed folks in the other 5 Mid-Hudson counties that, at the urging of their licensed dealtors sellers had begun including finished or partially finished basements in Above Grade room counts and GLS factors on Listings........ When I say that fully one half of the attendees jumped to their feet and yelled - "YOU CANNOT DO THAT THAT IS FRAUD". I replied, "I know that, you know that, insurance companies know that, ethical lenders know that - I am simply reporting that it is happening in Westchester County right now and has begun to happen in Rockland, Orange and Putnam and within a year I assure you it will happen in Dutchess and Ulster as well. Watch your backs folks.

Within 2 years - magically delicious MLS listings magically priced One Story Ranches as "Contemporary" and "Raised Ranch" style homes on Slab. 2 Story Contemps and Colonials with say 2000-3000sf above grade GLA instantly "became" 3000 to 4000sf Homes and ...............

Drumroll.......entire markets became "magically" over-priced. Simultaneously, when local county-specific Appraisers balked at committing fraud - herds of duhpraisers from as far as 2 hours away including those from adjacent states (sending their licensed trainees into markets they had no business appraising in, had no direct access to local MLS, couldn't find Town or Village Halls if you took them and drew them a picture ........became "YOU DA MAN !!!" .......... Dutifully accepting cherry-picked MLS listing and sales sheets from "helpful" local ree-lators and reporting that data as "fact", failing to learn how simple it is to review Building and Assessment Records because "hell MLS SAYS THIS so it must be correct" ............

the rest is history.

http://appraisersforum.com/showthread.php?t=195458

 

[Restrain]

You are doing his for the seller. The seller will expect the report to conform to what will happen when the home sells and the appraiser comes in from the lender.

So, you have several expectations. First is the GSE guidelines. Second, is how the public and the market treats the home. You will have to weigh these expectations and make a decision. Whichever way you go, support your decision. The knee-jerk reaction is that the lender's appraiser will treat the below grade family room as a basement, so that has to be a significant part of your decision tree.