Did you know your home’s gross living area does not include your garage or any space below grade, like a basement?
As a national appraisal management company, one of the most common questions we get from borrowers and even lenders revolves around how living area is calculated. We get asked about heated vs. non-heated spaces, finished and unfinished basements and even porch and patio areas. So does the appraiser actually consider when referring to the gross living area square feet?
Let’s start with defining gross living area, commonly referred to as GLA. GLA is measured by the appraiser during their inspection using the exterior building dimensions per floor. Sometimes upper levels will be measured from the interior if the appraiser isn’t able to access them from outside.
Enclosed porches or finished spaces above grade can be included in GLA if they meet certain requirements, such as having a permanent hear source, being finished to the same quality as the main dwelling, obtaining a permit. Without these items, the impact on value will be considered and noted, however the area may not be included in the GLA.
So why is a basement or a level partially below grade sometimes not counted in the GLA and overall room count?
“Above grade area” refers to that finished part of the dwelling that is above the ground line, or grade of the earth. Think of the first floor and any floors above.
“Below grade area” is usually defined as the area that is ALL or PARTLY below that ground line. Think basement space. Even if that space has windows it is considered below-grade.
Above-grade and Below-grade are reported as distinct areas and the appraiser will report and value them separately on the sales comparison grid. Only finished above-grade areas can be used in calculating and reporting above-grade room count and GLA. Fannie Mae considers 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. This would be given value as a finished basement.
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