What is Gross Living Area (GLA)?
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What is Gross Living Area and What Does it Include?
There are certain properties where aspects of Gross Living Area (GLA) might not be obvious. It’s more confusing when the selling real estate agents lump all “living space” together, because that’s what they are selling, or when the county assessor includes basements with upper level areas.
These include homes with a detached ADU, additional rec room or sleeping space above a garage, additional living space with roof attached to the primary dwelling via covered breezeway, basement living spaces with separate entry, etc.
Fannie Mae has a giant book called the Seller’s Guide, a portion of which describes how they expect living spaces to be annotated, as do Freddie Mac, FHA, VA, USDA, etc.
For this discussion, here is the FNMA guideline:
B4-1.3-05. Sellers guide.
Gross Living Area
The most common comparison for one-unit properties, including units in PUD, condo, or co-op projects, is above-grade gross living area. The appraiser must be consistent when he or she calculates and reports the finished above-grade room count and the square feet of gross living area that is above-grade. The need for consistency also applies from report to report. For example, when using the same transaction as a comparable sale in multiple reports, the room count and gross living area should not change.
When calculating gross living area
- The appraiser should use the exterior building dimensions per floor to calculate the above-grade gross living area of a property. (measuring process also applies to below-grade area)
- For units in condo or co-op projects, the appraiser should use interior perimeter unit dimensions to calculate the gross living area.
- Garages and basements, including those that are partially above-grade, must not be included in the above-grade room count. (See ‘exception’ below)
See ‘exception’ below – only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area. 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.
Rooms that are not included in the above-grade room count may add substantially to the value of a property, particularly when the quality of the finish is high. For that reason, the appraiser should report the basement or other partially below-grade areas separately and make appropriate adjustments for them on the Basement & Finished Rooms Below-Grade line in the Sales Comparison Approach adjustment grid.
For consistency in the sales comparison analysis, the appraiser should compare above-grade areas to above-grade areas and below-grade areas to below-grade areas.
The EXCEPTION….Pay attention to this >>> The appraiser may need to deviate from this approach if the style of the subject property or any of the comparables does not lend itself to such comparisons. For example, a property built into the side of a hill where the lower level is significantly out of ground, the interior finish is equal throughout the house, and the flow and function of the layout is accepted by the local market, may require the gross living area to include both levels. However, in such instances, the appraiser must be consistent throughout the appraisal in his or her analysis and explain the reason for the deviation, clearly describing the comparisons that were made. (This means you CAN include below grade living space and room counts with the above grade GLA & room counts as necessary. I have done so numerous times with no problems. But doing so requires an explanation in the report, and treating all properties the same.)
Separate ADU’s: should not be included in the home’s GLA
Living space(s) not directly connected to the home’s primary heated envelope: should not be included in the home’s GLA – such as are sometimes found above garages accessed via a built stair (not the pull-down type) from within the unheated garage, or in below main floor locations accessed from a separate exterior entry not connected to the main floor
Bonus rooms (typically above garage) within heated envelope of dwelling: included in GLA
Living space(s) in outbuildings: should not be included in the home’s GLA
Living space(s) in converted garage space: this is probably the hardest to figure out. Some jurisdictions do not consider these areas to be ‘living space’ unless “permitted” when constructed; others don’t care. Some lenders want to be sure about “permitting” and demand rip out (or no value given) if not, and others don’t care. An issue of concern is dwelling insurance liability; without a permit in place the insurer may not replace that space as it was before the damage, or if it can be proven the damage started within unpermitted space, there may not be any insurance coverage to the entire structure. Secondly, proper code compliant egress may not be in place in these extra garage areas. The appraiser probably should check for jurisdiction permits. Converted garages into living space are not always apparent from the exterior. Appraisers need to be very careful with this type of situation and probably should communicate with the client up front before proceeding with report write-up and completion – especially when the finish appears to be as good as the home interior.
Upper floor areas with space ‘open to below’: if you can’t walk on it, it’s not GLA! (angel wings don’t count!)
Interior stairs between levels: are counted in the GLA to the floor from which they originate (per ANSI Z765-2003).
- Stair area between main and second floor: GLA applies to both floors for that space (& floors 2 & 3, etc.)
- Stair area from main level to basement: living space applies to basement level
NOTE: architects and building designers do not have a consistent way to calculate stair areas. I’ve seen many variations.