Apple Appraisal Blog

Recently, local TV station KGO Channel 7's Michael Finney reported on the discrepancies in a home's reported gross living area vs. what the's size actually is.

Finney reports, "The lack of standardization makes it difficult for realtors to state square footage with certainty. Their information often comes from public records at the tax assessors office, but even that can be wrong, especially when people remodel their homes without notifying the county and taking out the proper permits."

The lack of standardization among Appraisers, Realtors, Architects and Builders can lead to severe losses for a home owner.

I recently had the occasion to appraise a home that was being renovated and expanded. I was given a set of blueprints, and when I wen to the property, it just didn't "feel" as big as the blueprints said it was. The blueprints showed the living area of the subject property to be 3,888 sf. I plugged the dimensions of the sub ject, based on the blueprints, into my handy dandy sketching program. I was scratching my head after coming up with a little over 3,200 square feet. I checked and re-checked all of the dimensions and the transferring of them from the blueprints to my sketch. Nomatter what way I looked at it, I kept coming up with nearly 700 sf. less than the architect.

As a last resort, I went back out to the property to physically measure the property and verify the architect's dimensions. All of the dimensions were correct.

I went back to my client to explain the issue, which would have a severe impact on the potential value of this property. The Architect's 3,888 sf vs. my 3,212 sf is a significant difference with a big impact.

We called the Architect and he explained that his 3,888 sf included the garage. Well, that solved part of the mystery, but the garage was only about 400 sf. The Architect could not reconcile the other 300 sf.

The heart of our problem was the lack of standardization for determining the Gross Living Area of a home.

Bring in The ANSI Standard for Measuring Houses!

In April, 1996 the American National Standards Institute (ANSI) adopted a standard for measuring single-family residential buildings. American National Standard Z765-1996 was developed through a process of consensus among a wide variety of participants. These included the American Institute of Architects, the Appraisal Foundation, the Building Owners and Managers Association, the Manufactured Housing Institute, the National Association of Realtors, Fannie Mae, Freddie Mac, HUD and others.

The ANSI standards are NOT LAW, only a voluntary guide, and are subject to periodic review and revision. But anyone using these standards must apply them as a whole, and not just pick out the parts they like or agree with. The standards are intended for both attached and detached single family residences, but not for apartments or multi-family residences.

The ANSI standards base floor area calculations on the exterior dimensions of the building at each floor level, and include all interior walls and voids. For attached units, the outside dimension is the center line of the common walls. Internal room dimensions aren’t used in this system of measuring.

The ANSI standards define "finished area" 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.” Measurements must be taken to the nearest inch or tenth of a foot, and floor area must be reported to the nearest square foot. Garages are specifically excluded.

How We Measure a House

• If there are stairs, we include them on every level they serve. The area below the stairs, such as a closet or half bath, is included on the floor the stairs go up from.
• For split-level designs, we measure each level.
• We exclude any areas, such as porches, poor quality additions, breezeways, detached rooms and converted garages, that are not finished or heated the same as the rest of the house.

Basements and Below-Grade Floor Areas

The ANSI standards make a strong distinction between above-grade and below-grade floor area. The above-grade floor area is the sum of all finished square footage which is entirely above ground level. The below-grade floor area includes spaces which are wholly or partly below ground level.

Disregard the old rules of thumb that allow you to include below-grade areas if they are less than five feet below grade, or if less than half the area is below grade. If the house has any areas below the natural grade, we measure that whole level separately. Even if the below-grade areas are fully finished, they are not part of the finished floor area according to ANSI standards. This is also the case for FNMA's guidelines, which follow the ANSI standard.

The real estate profession, including Appraisers, often describes houses by their total room count, the number of bedrooms and the number of bathrooms they contain. For example, the shorthand convention "5/2/1.5" describes a house with 5 rooms, 2 bedrooms and 1.5 bathrooms.

Local custom determines the definition of a "room." In general, a room is a kitchen, a bedroom, a living room, a dining room, a family room, an office or a den. Bathrooms, laundry rooms, sun rooms, lofts, closets, storage rooms and entries are not usually considered to be rooms.

What is the difference between a den and a bedroom? If the den can function as a bedroom, there may be no difference at all. What is the difference between a dining area and a dining room? If you could add walls and it would remain functionally the same, a dining area can be called a dining room.

A bedroom is any room that you can fit a conventional bed into. Usually the local zoning, building or health codes establish minimum requirements for bedrooms. In general, bedrooms should be at least 90 square feet in size, with at least one bedroom in the house 120 square feet in size. Bedrooms should have a window which provides an emergency exit, natural light and ventilation.

Bedrooms should have direct access to a hallway, living room or other common area. You should not have to walk through one bedroom to get to another. A bedroom should have a closet, but this is optional. Before closets, people stored their clothes in armoires and dressers.

A caveat to the bedroom rules can be how many bedrooms are allowed on a particularly sized septic system. This is the case in counties that are mostly rural or that have a lagre percentage of homes on septic systems. If a county building department allows only a certain number of bedrooms on a septic system, then legally, they consider any bedrooms beyond what is allowed to be illegal.

Local custom also defines the bathroom. In most parts of the country, a full bathroom includes a toilet, a sink, a bathtub or shower. In most places a combination bath and shower counts as two fixtures. If the bathroom has only three fixtures it is a 3/4 bath. If it has only two fixtures it is a 1/2 bath, and if it has only one it is a 1/4 bath.

Back to the home in question, after applying the ANSI standard, which again, is not law, but is the standard that most appraisers use, we found that we had indeed, a 3,212 sf home and not a 3,888 sf home.

Have the owners suffered a loss? I think so. All because professions that should be working in concert, are working with different standards.

If you have any questions on this or any other appraisal issue, contact us at appraisals@goapple.com or 925-313-5900.