Data Facts Lending Solutions Blog

How Do Appraisers Calculate Building Size?

by Matt Holmes

Jun 15, 2020 9:02:00 AM

Home Measurements for Appraisals

Our licensed and certified appraisal review staff comes across appraisals on nearly every property type. Sometimes, lenders or property owners ask us for our opinion regarding building size- how is it calculated and what factors go into it? The answer is more complex than you might think. Living area is one of the most important aspects of a home, but it is often one of the most misunderstood. 

The American National Standard Institute, or ANSI, is a non-profit organization that facilitates the standards for various industries, including the standards for calculating building size. According to the ANSI, Gross Living Area, or GLA, is the term most frequently used for measurement in residential appraisals.

What is considered valid square footage?

A common misconception among property owners is that terraces are accounted for in GLA. Although one might consider this livable space, these areas are typically not reflected in GLA under ANSI standards, because they are “unfinished”. According to the ANSI, a finished area is defined as “an enclosed area in a house suitable for year-round use, embodying walls, floors, and ceilings that are similar to the rest of the house.”

What is considered “above-grade”?

If any portion of the room is below the grade of the ground, this area cannot be used in the calculation of GLA or above-grade room count. Garages and basements, even if partially above-grade, also cannot be used. However, rooms that aren’t included in the above-grade room count may still substantially impact the value of the home, especially when they are of high quality. That’s why appraisers list these areas separately on a sales comparison appraisal grid.

When does ceiling height come into play?

According to ANSI, a room must have a ceiling height of at least 7 feet to be included in square footage calculations, unless under stairs, beams or sloped ceilings. Oftentimes though, homes may have finished attic areas with sloped ceilings. ANSI says that in this case, any portion of the sloped ceiling that is under 5’ should not be included in the GLA.

Room Counts

The Fannie Mae/Freddie Mac form appraisal report describes a house by its above-grade room count, as well as the number of baths and bedrooms. For example, a house might be described as having 6 rooms, 3 bedrooms, 1 full and 1 half bathroom. As with basement square footage, all finished rooms in a basement are noted separately from the above-grade room count.

Generally, a room can be considered a kitchen, a living room, a bedroom, a dining room, a study, a family room, an office, or a den. These rooms don’t necessarily need to be divided, as long as there is space for their intended function. This trend is becoming increasingly common with the rise of “open concept” living spaces. Areas that are not included in the overall room count are Bathrooms, breakfast nooks, storage rooms, laundry rooms, mudrooms, foyers and closets.

Data Facts is your single-source provider for appraisal management services. Whether you wish to completely outsource your appraisal process, or prefer to manage parts of it in-house, Data Facts has options for your lending team. You can learn more here.

Topics: Appraisal, Appraisal Management, AMC

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