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You will bump into people who think any finished basement area should go to buyers for "free" because it doesn't exist.
Odd, but true.
This all all about permits and taxed space I bet
If no permits were issues and the local tax authority did not change the house description to include another full bathroom, basically it isn’t legal and doesn’t exist in some ways
DID the initial mortgage appraisal included it or just ignore it?
Maybe property values have fallen?
If no permits were issues and the local tax authority did not change the house description to include another full bathroom, basically it isn’t legal and doesn’t exist in some ways
DID the initial mortgage appraisal included it or just ignore it?
Maybe property values have fallen?
No, it is more aligned with the supposition that even legitimate below grade living area is not living area.
That surely will come into play but no. It's the SELLERS who want full credit for a "less than" space.
The few unqualified exceptions to the discussion are the homes where that lower level was part of the original design
and because of that is integrated to the upper levels (HVAC and open stairwells etc).
As to the other 90+% of homes with remodeled lower levels (I have one too btw)...
almost none of them can meet the FHA loan standards as a part of the "GLA" footage.
cue: Bruce Hornsby LINK
If you aren't doing an FHA loan and/or the buyer doesn't notice or know or care... c'est la vie.
The improvements, often very well done and sometimes with better detail than the upstairs,
still have value. I certainly like to think my property is worth more because of the effort and costs.
The question is about how to present the additional space being offered (or appraised):
without qualification statements? without meaningful price discounts? I'll stick with "equitable"
The topic comes up a lot when comparing homes for sale in the same development (being so obvious)
every other house asserts 800-1000SF less space (GLA) than the seller asserts his home to have.
It needs to be understood as a separate category of space for these well known reasons.
I have seen some remodeling shows where basements were dug out and fully insulated/HVAC added and they had egress windows added both for safety and light quality…think those were usually in Canadian locations
In my part of US (TX and FL) basements are not part of normal design
Only time they are used would be on sloped lot where there is benefit for a “walk-out” basement and that is usually a lot with a view…like on TX lake
That surely will come into play but no. It's the SELLERS who want full credit for a "less than" space.
The few unqualified exceptions to the discussion are the homes where that lower level was part of the original design
and because of that is integrated to the upper levels (HVAC and open stairwells etc).
As to the other 90+% of homes with remodeled lower levels (I have one too btw)...
almost none of them can meet the FHA loan standards as a part of the "GLA" footage.
If you aren't doing an FHA loan and/or the buyer doesn't notice or know or care... c'est la vie.
The improvements, often very well done and sometimes with better detail than the upstairs,
still have value. I certainly like to think my property is worth more because of the effort and costs.
The question is about how to present the additional space being offered (or appraised):
without qualification statements? without meaningful price discounts? I'll stick with "equitable"
The topic comes up a lot when comparing homes for sale in the same development (being so obvious)
every other house asserts 800-1000SF less space (GLA) than the seller asserts his home to have.
It needs to be understood as a separate category of space for these well known reasons.
I think it would be reasonable for an appraiser to assign some "square footage equivalence" for semi-finished or finished basements. This equivalence figure would be some percentage of how well/completely the finish is in the basement as compared to the main/upper floor rooms.
Factors to consider would be: HVAC, electrical outlets, floor coverings, lighting (both electrical and natural), wall finishing, ceiling finishing, bathroom quantity and quality, and ceiling height. This would allow the appraiser to give some "square footage equivalence" (partial credit) for the basement even if it's not totally up to the standards of the main level.
Simple Example: If the basement had 1,000 square feet, then the appraiser could allow anywhere from about 25% equivalence for no finishing at all (just block walls and concrete floors with minimal lighting) up to 100% for completely equivalent finishing. Most basements would probably fall somewhere between these two extremes. So, if the appraiser finds that the overall basement is finished at about 60% as well as the main level of the house, then he could count 600 square feet (60% of 1,000) "square feet equivalence" for the basement. This would give the whole house a square footage equivalence of 1,600 square feet (1,000 SF for the first floor plus 600 SFE for the basement) for appraisal purposes.
While the mathematics of this may be confusing to the mathematically challenged, I can assure you that anyone who is competent at 8th grade math would have no problem at all. If a person can figure percentages and do some simple multiplication and addition, then this would be a piece of cake.
If no permits were issues and the local tax authority did not change the house description to include another full bathroom, basically it isn’t legal and doesn’t exist in some ways
DID the initial mortgage appraisal included it or just ignore it?
Maybe property values have fallen?
The initial appraisal done for purchase shows 2.5 baths but the current refi appraisal shows 2 so the basement bathroom was counted as a half bath initially. I would be fine with that, but to completely exclude the bathroom that has been previously listed is what I do not understand
I think it would be reasonable for an appraiser to assign some "square footage equivalence" for semi-finished or finished basements. This equivalence figure would be some percentage of how well/completely the finish is in the basement as compared to the main/upper floor rooms.
Factors to consider would be: HVAC, electrical outlets, floor coverings, lighting (both electrical and natural), wall finishing, ceiling finishing, bathroom quantity and quality, and ceiling height. This would allow the appraiser to give some "square footage equivalence" (partial credit) for the basement even if it's not totally up to the standards of the main level.
Simple Example: If the basement had 1,000 square feet, then the appraiser could allow anywhere from about 25% equivalence for no finishing at all (just block walls and concrete floors with minimal lighting) up to 100% for completely equivalent finishing. Most basements would probably fall somewhere between these two extremes. So, if the appraiser finds that the overall basement is finished at about 60% as well as the main level of the house, then he could count 600 square feet (60% of 1,000) "square feet equivalence" for the basement. This would give the whole house a square footage equivalence of 1,600 square feet (1,000 SF for the first floor plus 600 SFE for the basement) for appraisal purposes.
While the mathematics of this may be confusing to the mathematically challenged, I can assure you that anyone who is competent at 8th grade math would have no problem at all. If a person can figure percentages and do some simple multiplication and addition, then this would be a piece of cake.
It is a walkout basement. The bathroom is located inside of a finished room which accounts for about 35% of the basement, the rest is unfinished. It has HVAC vents, electrical outlets, windows, doors, walls, ceiling lighting and flooring.
I think it would be reasonable for an appraiser to assign some "square footage equivalence" for semi-finished or finished basements. This equivalence figure would be some percentage of how well/completely the finish is in the basement as compared to the main/upper floor rooms.
Factors to consider would be: HVAC, electrical outlets, floor coverings, lighting (both electrical and natural), wall finishing, ceiling finishing, bathroom quantity and quality, and ceiling height. This would allow the appraiser to give some "square footage equivalence" (partial credit) for the basement even if it's not totally up to the standards of the main level.
Simple Example: If the basement had 1,000 square feet, then the appraiser could allow anywhere from about 25% equivalence for no finishing at all (just block walls and concrete floors with minimal lighting) up to 100% for completely equivalent finishing. Most basements would probably fall somewhere between these two extremes. So, if the appraiser finds that the overall basement is finished at about 60% as well as the main level of the house, then he could count 600 square feet (60% of 1,000) "square feet equivalence" for the basement. This would give the whole house a square footage equivalence of 1,600 square feet (1,000 SF for the first floor plus 600 SFE for the basement) for appraisal purposes.
While the mathematics of this may be confusing to the mathematically challenged, I can assure you that anyone who is competent at 8th grade math would have no problem at all. If a person can figure percentages and do some simple multiplication and addition, then this would be a piece of cake.
This is already part of the appraisal.
There is a line right below living area on the grid that breaks down the number of rooms, bedrooms, and baths and % finished of the basement.
Basements are valued in appraisals based on how the market values below grade areas. Some markets value basement the same as living area. So, the appraisal will reflect the same sf adjustment for the basement as the main living areas. In other areas, they have less value and the appraisal will reflect that. Just because it's listed on a different line, doesn't mean it wasn't counted or valued.
It would be great if people actually read appraisals and understood them.
Last edited by thebigW; 07-17-2021 at 09:15 PM..
Reason: sp
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