Appraisers, buyers, sellers, realtors, and other real estate professionals often calculate GLA, also known as gross livable area, using specific guidelines. The American National Standards Institute (ANSI) provides the standards for Fannie Mae transactions. These standards are used to ensure consistency and accuracy in appraisals.
ANSI Standards
For single-family homes, manufactured homes, and townhouses, Fannie Mae requires the use of ANSI standards to calculate square footage. However, these standards are not required for desktop appraisals, apartment-style properties, or multi-family properties. The ANSI standards help define what constitutes living space, ensuring that measurements are consistent across different appraisals.
Differences in Calculations
The figures calculated using ANSI standards often differ from those used by buyers, sellers, county auditors, and other real estate professionals. This discrepancy can lead to confusion, especially when different lenders have varying requirements. While other government lending institutions like Freddie Mac, FHA, and the VA accept the ANSI standard, they are not mandated to use it.
Why Some Lenders Include Certain Square Footage
Lenders may have different policies on what square footage can be included in an appraisal report. This can depend on the type of property, the specific lender’s guidelines, and the intended use of the appraisal. Understanding these differences can help alleviate confusion and ensure that all parties involved have a clear understanding of the property’s value.
Appraising different types of homes can present significant challenges
Cape Cod Homes: The ANSI standard aims to provide uniformity but can cause confusion and potentially affect the appraised value of homes with unique features like low ceilings. These homes often have finished upper levels with ceiling heights less than 7 feet. According to the American National Standards Institute (ANSI), these areas, although livable, cannot be included in the total finished square footage for Fannie Mae appraisals. Instead, this finished space is noted separately in the appraisal report, with adjustments made accordingly. Other agencies like Freddie Mac, FHA, and the VA may include this space as Gross Livable Area (GLA).
Bermed Earth-Sheltered Homes: These homes, which may be partially or fully covered with earth, present another challenge. ANSI guidelines might initially suggest these homes have zero GLA, but exceptions can be made through specific processes.
Key Points of ANSI Standards
- Measurement Precision: Measurements are taken to the nearest inch, and final square footage is reported to the nearest whole square foot.
- Staircases: Included in the square footage of the floor from which they descend.
- Basement Areas: Finished areas below grade are considered basement space and are not valued equally with above-grade finished space.
- Open Areas: Spaces like two-story foyers are not included in finished square footage.
- Ceiling Heights: Finished areas must have a ceiling height of at least 7 feet. Rooms with sloped ceilings must have at least 50% of the area with a 7-foot ceiling, and areas with less than a 5-foot ceiling are excluded.
- Unpermitted Additions: If an addition lacks the required permits, its quality and appearance are noted, which can impact market value.
Final Thoughts
When evaluating a home, appraisers must take numerous factors into account. Sellers can gain an advantage by hiring a licensed real estate appraiser who is knowledgeable about the local market before listing their property. Although buyers cannot use this appraisal for their lender, it provides sellers with a clearer understanding of the home’s fair market value and highlights the potential need for appraisal gap language during negotiations.
For more detailed information, you can visit the Appraisal Foundation Organization’s website.
Selling your home without a full-service real estate agent can save you thousands in commissions. Maximizing marketing exposure is crucial. With over a billion dollars in real estate sold and millions saved in commissions, our team can help. Discover how Ohio Broker Direct’s For Sale By Owner Flat Fee MLS Listing Options can boost your marketing exposure, ensuring a faster sale at a higher price with better terms. Contact us directly, visit our blog, or sign up for our newsletter to stay informed and maximize your profit.
