It’s the area totals that are rounded to he nearest foot. Not the dimensions. It makes a big difference.

Thank you.

Mike/
Really good examples. Thanks for sharing.
I cannot tell you how much I agree with you on your opinions here. Well Thought out and really well written. TY

Mike

First and fore most I have to CLEARLY STATE as I have repeatedly stated on this BLOG that I agree with a STANDARD form of Measuring. I am NOT against ANSI. I hope I have now clarified this.

I am however against FNMAs or any other lender’s over lays and requirements for appraisers to determine the MARKET adjustment of anything that the Market does NOT even recognize. And I am deadly against PFA adjustments that are not reliable because the measurement system is not universal and can not be properly implemented and enforced until it is made universal for all fields/Professions dealing in REAL Property with/for/ or in connection with the public. I could even deal with that chaos if the appraiser’s neck and E&O was not on the line!!

We all know that lenders ask us to do things many time that we cannot do because we have an appraiser’s license. They don’t care cause it’s not their license on the line and not their job to protect ours! They ask us to revise the appraisal because the contract price was changed after the appraisal when their own lenders guide tells them it is not required. They do not even know their own rules and requirements. They ask us to omit things and change things and re write things in ways we know we cannot do. Again its not their license.

Now FNMA is asking us with our experience and knowledge of the area and styles to adjust when in 2020 and before they clearly stated MARKET BASED ADJUSTMENT MUST BE USED. This new change is open for interpretation in a lot of ways as they state our experience and knowledge should be enough for reliable results in extracting adjustments on or for properties we have never been in ! Even 2055 reports do not make us this vulnerable. There a lot of ambiguity here and a lot of it is going to hurt a lot of our peers. IMO.

I do agree with a lot of what you said as far as buyers and the way they find the perfect home. It is emotional and lenders are slide rule thinkers. No room for emotion or illogical preference. If they had their perfect world all homes would be 3 BR 2BA 2000 sq ft homes all the same style, mostly stucco, tile roofs (so they could be built anywhere) with 2.5 garages on .25 acre lots and all cars would be black 4 door’s. But THAT IS JUST NOT REAL. Lenders clearly state that ALL BUYER RELY HEAVILY ON PRICE PER SQUARE FOOT to purchase a home. Well as an agent YOU KNOW how UNTRUE THAT IS!! (maybe not in CA, NY, etc. but here it is just not correct)

Next

Sorry perhaps your State, Board, or area did not follow all of the rules and regs that we had here. I did say clearly that licensing was just licensing until they came up with the Residential, Certified Residential and Certified General labels years later. So yes I did work under 3 different General Appraisers. Now lets acknowledge the Crash of the S&Ls in the early 80’s changed the face of lending forever , prior to that there were still appraisals and they were still completed by appraisers. Excerpt from https://appraisalbuzz.com/the-history-of-appraisals/

“In the 1930s when the FHA was set up, they asked two very precise questions of the appraiser – what the value is and document the process you used to arrive at that value.”

FHA did not even have a guide of what was to be done to give and estimated opinion of value. The appraiser told FHA what they did to develop the opinion.

So way before MOST of us were here there were Appraisers. Non Licensed , untested and non regulated people who worked in the industry and were appraisers.

When licensing was implemented here the tests here were 50 questions, about 30 minutes to complete and no real proof of experience was required. There were no apprentice appraisers and no educational requirements. All three of the General appraisers I worked with passed their 30 min licensing test and were absolutely Grandfathered in as appraisers. Since grandfathered in their status as General Appraisal (when that became a designation) was established by the experience they claimed in Commercial valuations. But of course as you know since there was no logs or proof of records that could be verified by the State Appraisal board for these hours and assignments to be kept these appraisers were granted licenses and later Certified General licenses with no further testing and no further proof of experience other than a letter from a lender or lenders stating they had worked as appraisers on files for that lender and as many as 3 letters of character references. Some could also provide US Military documents showing service and honorable discharge. After licensing they were required to take some very short CE every few years until the State got more serious. Incidentally we did paste the photos, there was no MLS info sharing and the form was a total of 12 pages with all disclosures and 3 subject required photos. No Comp photos were required . We sent the report over night cause there was no other way to get them to the lender.

AS you know, The grandfather clause means. Those exempt from the new rule are said to have grandfather rights or acquired rights, or to have been grandfathered in.

In my State they still recognize the Grandfather clause for certain activities in appraising .

Remember there were a lot of Real Estate sales Brokers, people and Appraisers prior to the requirement of licenses. They could not just make up new rules and requirements and make them all comply after years in the industry. So yes they were Grandfathered in.

No one got grandfathered in on their licenses. Not anywhere in the USA since licensing became required. MY test was an all-day test. Much more difficult than any of the sales agent tests I ever took (1971 & 1984)-though that background helped. I had to meet all AQB & CA state requirements then in effect. I’m told later tests were made easier because the failure rate among newer applicants was too high. I started as a General Certified Appraiser. MAYBE later tests are harder. I don’t know. I don’t have to take them. Based on courses I see offered for CE, I don’t think they are.

No one has been licensed as an appraiser in America for 40 years. FIRREA was passed in 1989. Most states weren’t able to implement it until 1991-1993. You said you worked under 3 General cert appraisers “Then came licensing”. Prior to licensing, there was no such thing as a general certified appraiser. I assume its a mistyped thought.

Your post raised many valid discussion points. They lose a little impact when coupled with other factually incorrect statements.

Assessor cards (or data) in many areas have always been unreliable. Most of us have learned where our public records data has weaknesses or unreliability and have learned how to augment it. I assume you have too.

I too was a licensed agent, & worked in two states (CA and NV). One critically important necessity is to temper my agent mentality and thought process with appraiser objectivity.

IN residential RE, EMOTION sells houses. Most buyers know if they are going to make an offer when they pull up to the curb (barring unusual circumstances).

WE have to try to quantify or at least qualify that emotion in terms of dollar equivalents. MUCH of it is theoretical rather than actual. The principle of substitution is not black or white science. Its subjective analysis applying recognized techniques. Same with the Principle of Anticipation. hard to quantify exactly. We can only make supported estimates. (This btw is why AVMs will ultimately fail-they can only quantify)

Paired sales may prove you incorrect on what a buyer does or doesn;t pay more for. Same with the condition. Not all markets are the same. Some years ago (2015) the SOMA area of San Francisco buyers were paying from $50k to $100k per sf of patio or balcony area in /on condos…which was MORE than the gla on a price per sf (admittedly an oddity). Proven by broker supplied paired sales data.

My market (L.A.) doesn’t typically pay a quantified amount for an extra room or a BR vs den. Yet buyers consider room count at least qualitatively. My own house had oddball “rooms” that were the main reason I bought it. Did I quantify their value? No. I was paying 50% of the prior loan balance for it as an REO.They were part of the buy or no buy decision.

Did the lender appraiser I had consider these “rooms” in a recent refinance? Not as rooms. Frankly, he side-stepped the issue completely and just reported a finished attic…and still appraised my property about 5%-to 10% high. None of them (2.5 “rooms” + bath) meet ANSI requirements.

Did he adjust it the same way I would have? No. He doesn’t have to do it the same way. But he was generally consistent with my own very hyper-critical analysis. Who knows-Maybe I underestimated by 5%-10%? He(we) only has to credibly approximate a “hypothetical most-probable buyer”. The ones inferred in market value definitions.

If you want a really interesting example of GLA SF litigation try the California case of Horiiki V Coldwell Banker and (an agent). Three appraisers plus a 3D laser measuring system, builder plans, (all 5 different) and city officials that reversed documented city policy in their testimony of two-story limits and how GLA is considered.

Issue? Was the house GLA 15,000+ SF or was it 10,400+-SF (PLUS other areas used for daily living)? A roughly $15 million dollar property. In courts now for over ten years. COURT concluded SF incorrectly. Not ANSI, Not AMS, not even as per plans.

This super-expensive lawsuit could have been EASILY avoided. IN fact, in one listing iteration, it WAS reported correctly in text descriptions. “Over 15,000 SF of living areas.” not living area. The issue came about from the MLS abbreviated “Living Area” Price per SF indications.

BA this ‘makes ANSI your argument’ in many aspects but HAD ANSI been followed AND careful commentary been added to explain totals, this lawsuit would likely never have had any GLA discrepancy basis. It would also have closely matched the SF stated in the plans.

This was a complex case. It involved a reputable brokerage and a highly successful agent who also had (has) a great reputation in his market. I never got a sense in reading this or prior trial transcripts and depositions that anyone (until the trial anyway) was trying to fool or mislead anyone.

The listing’s price per SF reportedly lead the buyer to believe he had been overcharged. The purchase contract was (reportedly) signed hurriedly in a poorly lit bar area of a hotel before the foreign buyer for whom English is a second language had to catch a plane to fly back to Hong Kong.

Good people on all sides. The ‘culprit’ appears to be a lack of consistency in how SF was reported in various sources including the MLS. I read all three appraisals, reviewed the plans, and also the GeoSlamm Zeb Revo results ( https://geoslam.com/solutions/zeb-revo-rt/ ) completed by a landscaping firm that offered this service for “as-built” architectural needs. One appraiser’s deposition indicated advocacy and an attempt to obfuscate how the property GLA should be calculated. At that point, very large sums of money were at risk.

ANSI absolutely would have missed the market perception of living areas. But at least it would have been a clearly defined articulable process mandated by certain GSEs and (today) current required practice. It would have been ‘defensible’.

BA-respectfully it isn’t as hard as it seems. (I don’t like all ANSI definitions btw- I just have to folow them). For those areas that absolutely are normal considerations by a buyer (Say a two story downsloping lot house where portions of all or one story is partially below grade):

Use the FNMA approved GX code.

Show ANSI qualified area as gla (rooms and gla) normally. ON A SEPARATE line (not necessarily basement if its not a basement) list the partially below-grade area (and explain ion addendum). Do NOT show rooms in below-grade areas in these calculations-add them below.

GLA/Rooms (-) $15,000
Other 300SF/ 1 rm & bath (+) $15,000 (or whatever it equals in your market).

“The subject is for all intents and purposes a six-room, three-bedroom, two-bath, house. It was built as a 3 bedroom house 40 years ago and has always been marketed as a 3 bedroom house. The market considers it and adjacent houses as 3 br 2 story houses.

Because of ANSI mandated guideline use, I am required to report only above grade area as gla or a room. TO assure my appraisal report is not misleading and reflects local market perceptions I have complied with ANSI requirements by only including ANSI dictated rooms and GLA in the subject living area boxes. I have put the market-recognized rooms and sf in the open space lines at the bottom of the grid. All size comparisons consider the total size differences. My comparables are the same or competitively similar sizes. Because of the ANSI dictated disparity between local market perceptions and ‘one size fits all’ bureaucratic mandated reporting requirements, sales 1 & 2 adjustments are made in BOTH the gla line and the lower utility line. The net difference is zero (or whatever it is).

Compliance with ANSI reporting standards results in unavoidable across-the-board adjustment.”

Modify to fit your writing style.

As for ‘not knowing on drivebys or desktops. Both USPAP and FNMA/lender special requirements REQUIRE us to decline assignments where we have insufficient information to credibly complete the appraisal. Its not an optional instruction. Clients order improper scope of work or report formats all the time. That is their responsibility. Ours is to decline to do them when they aren’t appropriate.

FWIW watch the fun when FNMA thinks they have all their super-software database complete enough to do this type of thing by AVM.

FNMA would not be high on my list of prudent investments unless you are an experienced day trader actively engaged in daily stock analysis.

The more referrals they make to state regulators based on their flawed and completely unreliable CU risk rating system just how badly screwed up they are becoming increasingly apparent.

They are already writing more (higher rate of) repurchase letters on currently performing, seasoned loans than throughout most of their history according to sources with direct inside contacts.

“Too Big to Fail II” or “FNMA Collapse Reprise” will be interesting when it hits.

John,

I appreciate the simplicity that you use to view this. I fully agree that this ANSI measurement thing is really no big deal. The FNMA comments and expectations are very different to me and many others though. Most of us are not “fussing about a uniform measurement” method. Most of us already had professional and proven method for measuring and although we did not take ANSI courses to learn we did use common sense and industry knowledge to report GLA and really it was ANSI compliant as well.

FNMA states that the non GLA area of the Cape or 1.5 story also has to be reported as non GLA on the GRID and then adjusted according to MARKET DATA. So now you have to decide how to measure the sloping area that is under 5′ and report it in the GRID. You also have to provide the sq footage for the same area in each comp and then use a DATA SUPPORTED MARKET ADJUSTMENT for the grid. I’m sorry but buyers just do not think of these homes in this way so where do we get market supported data? THERE IS NONE YET.

How do we get the under 5′ area in homes that no one has ever measured and reported in that way before? We certainly cant knock on doors to get verifiable accurate measurements can we?
FNMA has this answer ” The appraiser’s experience, knowledge of the area, style of homes and construction should be enough for the appraiser to be able to establish a GLA for the comparable and provide a Market data supported adjustment for the under 5′ ceiling height difference in the subject. CRAZY!!!

We see these homes all of the time. Rooms with sloping ceilings have desk, nightstands, children’s beds and toy shelves to name a few things in the lower areas of the slop. Now we know in the 40s 50s and even 60’s many homes with this style of construction were built with the idea of soldiers coming home from the service and battle and buying homes that they could raise a family in. Here the most common was called a HESLOP home . NO where in the history of this type of construction were these homes given values based on ceiling height. No buyer gave less for the shorter sloping area of the second floor. Where do we get data to support the adjustment in the grid that FNMA has made mandatory for non GLA adjustments?

How do we explain and separate the ground walk out level of a split or bi level typically a Family room and second bath from the main floor and determine a non GLA value to grid and adjust for? People value both as part of their GLA. Also in split levels some will now have only 4 rooms how do you deal with that? Then we also have to see that split levels will be about 850 to 950 of GLA so the price per sq ft will not appear as almost double. A 1700 sq ft split will now be 950 with a selling price of 220K how will buyers and lenders respond when the area shows homes with ranch Construction with 1100 sq ft are selling for far less ? FNMA had an idea and that is the ANSI which is fine but FNMA as always added very impractical and market adverse ideas of their own in the equation. FNMA has no idea how to adjust for anything let alone things that has never before in History been considered in the real Market. But they are now requiring the appraisers to put their necks in the noose for their craziness. JMO

Finally how do we determine if a split level is 3 or 4 levels with out interior inspection? What about the size of the below ground basement area who can provide that?

This is more than just a common way of measuring homes. This is a much bigger and more complicated issue and far more serious issues than measurements.

I have a few comments that may stir the need for a little more clarification here. We all at times wear different ” hats” and view things differently dependent on the role we are taking. I am an Appraiser of 25 years although I do know that in my State that means very little. All of the older appraisers were grandfathered in and did not have the education, testing requirements and standards/ rules to live by when they were officially granted their appraisal licenses. General Appraisal, Certified Residential or simple Residential Licenses for appraisal practice were not yet “invented” All there was, was an Appraisal License. Time and experience counted for different levels of licensing. Most of this was provided by people who were appraising with no way of substantiating the experience claimed.
The 2 years and or the 2500 hours required for an appraisal license was in many cases made up to satisfy the State. So many were given licenses that were not earned. They are appraising today!!They know this is true.

So in my State if you say you have been licensed for 40 years all that means to me is when there were no requirements and no over sight and little to no guidance you were part of the Wild Wild West of appraising. These people probably have appraisals from 40, 30 and even 25 years ago that fell painfully short of today’s requirements and standards. Those were the “teachers” many appraisers of today had. No real software, no common forms and really no consistency from one to the other. The banks had their favorite local “appraiser” and that person was used for almost all transactions for home loans.

I worked under 3 General Appraisers for a number of years . Each one did almost every thing different. The lack of consistency was astounding. Then came licensing. Each one of them went and took a 50 question 30 minute test which by today’s standard would be equivalent to a drivers license test from the 80’s. No education was required as STATED experience counted for everything. So people who said they were appraisers were given the benefit of doubt and got their now required licensing document.

Now we have to also consider that the same held true for Realtors. Many had very few if any requirements and before 1996 there was not even recognition of Buyers representation, disclosure or even consumer protection of any mentionable degree especially for buyers.

Add now that in my State the Auditor’s “crew” who created assessed values, Sketches, GLA, amenities and more on Real Property had no set uniform standards or methods and were not even licensed Appraisers until about 7 years ago!! Realtors Puff (nice way to say exaggerate) to draw in buyers by counting basements in GLA and LL room counts, unheated Attics as well as enclosed porches all in the MLS that buyers relay on!!

Now we are worried about consumer protection and misrepresentation by appraiser’s! OF COURSE WE ARE but the answer is not ALWAYS ONLY “FIX THE APPRAISERS and the APPRAISALPROCESS” FIRST!!

IMO There is nothing more misleading than making adjustments on properties we can not even verify for GLA, GBA, how many rooms are present. (often errors in reporting due to walls being removed by home owners due to the open floor plan boom) or even if there are bathrooms and kitchens inside.

In Ohio Bi Levels and Split levels are common through out but not every neighborhood will have more than a couple of one or both. Not all were sold in the past year or even in the past 5 years. Some have 3 levels some 4. No one knows until they do an interior inspection. The Auditor’s card shows these as having 1 level no basement.( ALL reported the same way by the site). No accounting for the upper level in Splits, or the walk out partial out of ground level in Splits and Bilevels or the below ground basement level in splits. Yet Fannie Mae states the appraiser’s knowledge of the area and styles as well as other sources should be enough for the appraiser to establish GLA and do reliable market adjustments. WHAT?? Not since 1980’s has it been acceptable for the appraiser to use guessing in appraising!! So out the window goes uniformity and accuracy and in with APPRAISER LIABILITY !!

Now I am all for uniformity but uniformity must include all occupations that the public relies on in any given trade or field and all across the country. So while the Auditor uses one method, the Realtors use another, the builder a completely different approach and the home owner sees it different than everyone else …there can not be uniformity IMO. If there are requirements for Appraisers and penalties and liability for failure to comply then all other fields must also have the same guide lines and penalties to establish uniformity.

Then we must also acknowledge the fact that this can not be fully and reliably accomplished until every home is re – sold or refinanced and/or ANSI measured for accuracy… which will take years to accomplish. So the FNMA requirement of uniform Accuracy of Measurements on Real Property may be misleading the consumer even more now as it is required to be declared in the Appraisal and the consumer is lead to believe that all homes are now measured this way with out a disclaimer for those that are guessed at!! and depending on who is measuring!!

Someone did not think this through completely IMO. While I have always used the logical ANSI approved/ standard guide lines for accomplishing GLA and GBA of properties FNAM also had an exception that was allowed to be followed that stated if the home had Market acceptance for a style or an area considered in GLA it could be counted in GLA. While the new requirement does give a GRID area to separate the level and the ANSI measured GLA of each level .. NOW the appraiser needs data to support an adjustment for MARKET REACTION on the walk out ground level or basement of a split or BI level AFTER guessing about the size or even existence of that area!!.

Well the consumer and the consumer data does not separate these areas out in my State. These homes are valued by consumers as a whole and not by level !! So now what?
So many questions, so many opinions and lack of factual data can never equal UNIFORMITY IN MY OPINION.

Finally as an Appraiser who is also a realtor(also for 25 years) I can tell you that most of what the consumers value, count and require is NOT what the Appraisers consider. I have never had a single person pay more or less for any of the things that appraisers adjust for with the exception of CONDITION FIRST AND FOREMOST, garage versa no garage and in Ohio possibly basements in comparable properties. (PLEASE READ the Definition OF COMPARABLE before disagreeing.) Then ask your Realtors to look at what you adjust for and see how many clients they can provide who paid more or less for the things you list.

The fact of the matter is this is not a big deal. In the URAR page #4 under “Statement of Assumptions and Limiting Conditions” item # 2 states “The appraiser has provided a sketch to show the approximate dimensions of the improvements. The sketch is include only to assist the reader in visualizing the property and understanding the appraiser’s determination of its size.”

Staircases would be very easy to solve, include the stairs in only the one floor and designate which floor or include stairs in both floor as long as they both floors are considered part of the living space. Just make a decision and live with it. Sloped ceiling are easy also, measure where the ceiling is 5’ from the floor and that is considered the exterior of the wall for that space, this would give you an interior height of 5.5 ft. Personally I think this should be increased to 5.5 ft since the average person is taller than they were several years ago.

A word of caution though. Some states have a requirement to use ANSI as the official standard to be followed written right into their state appraisal regulations. I’ll have to double check, but I had it stuck in my mind that it was also a USPAP requirement. Even if one uses AMS they’d still have to explain why the required ANSI was not sued (which could be boiler plated).

There ARE times when I explain it is simply not feasible to measure to the ANSI standard without copies of the blue prints used, due to ‘blind’ walls or foundation areas that simply cannot be measured on an exterior basis; and that I am ASSUMING wall thicknesses on certain interior dimensions. Like ALL exceptions, it simply needs to be explained, and I am covered. I also include a comment that if this is still a particular concern, the client or users can obtain copies of the blue prints for the improvements in question, and I will recalculate accordingly.

Try explaining how one wall is one and a half inches longer or shorter sometime-BUT that is how some ARE built.

Give that real estate brokers don’t get sued when the count finished basements as GLA and/or just put their finger up in the wind to guess GLA, I would not worry about 0.1 inch, or how to count the stairway.

And when all the assessors and all the appraisers count the stairway that is counter to ANSI, then you should do it counter to ANSI.