Is ANSI for Appraisers Really the Answer?
The real estate industry has a square footage credibility problem. ANSI has been out since 1996 with no new pages added and very few changes. In a constantly changing industry with new home styles and designs, change is a requirement. We have to remember that ANSI was originally created to be simple enough for a teenager to understand. It’s a great basic tool but falls well short of solving the real estate industry’s square footage problems.
The first problem is that mandating ANSI for all appraisers may be a good first step, but fixing the whole problem requires two additional steps we are not even discussing. Realtors® must be part of the solution. Every MLS listing must be required to be professionally measured according to a nationally mandated standard. MLS must be the true “source” of square footage data and tax records should move to the bottom of the square footage “source” list. Public Records has no responsibility or interest in the information the real estate industry needs.
In order for any standard to solve the industry’s square footage problem it should be mandated for appraisers, real estate agents, architects, builders, assessors, insurance adjustors, and anyone else who provides square footage details for the public. There are two other problems (three total) to be solved to bring Realtors® into this solution. First, we know is an industry-wide measurement standard. Secondly agents must have a reporting form that brings everyone to the same “language of real estate.” Between MLS and tax records there are over 100 different names for finished square footage. Think about that – 100 different names for finished living area. That’s a huge problem on its own. Third is a disclosure form for all real estate agents. Realtors® have a disclosure form for almost every imaginable situation and the number at the heart of all valuations doesn’t have one? That’s a problem. There must be a standardized form for every listing that shows the “source” of the sqft data and the standard used. This would help protect agents and their companies from liability, which has always been part of the square footage problem for Realtors®.
So where do these three tools come from? The Home Measurement Standard. It is very similar to ANSI but I call it ANSI on steroids. It has all the tools necessary to solve the square footage problem. Is the HMS perfect? It is not. I believe it should be condensed. The 26 sketches could be made part of a CE class or addendum for those that want to see more but not part of the standard.
After 25 years of ANSI I believe it’s time to try something new. Bring together a group of ten measurement experts, not just figure heads from different industries, but people who measure all the time and let them work on editing the HMS. Let these experts iron out a final edition. I firmly believe that within ninety days we could have a full standard that would start us on the path to solving the square footage problems within the real estate industry and bring consumer protection back to our industry. One industry – one language of square footage.
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The Home Measurement standard? I had not heard of if until I read the article today. And I’ve been an appraiser for 43+ years and am pretty active with various appraisal forums and FB groups. So how do you suggest this Standard be adopted when tens of thousands of appraisers, Realtors, and other RE professionals know NOTHING about it?
The HMS has been out for about four months. It’s been a learning process for 20 years finally condensed into this standard. I’m sure you haven’t heard of it before now since it wasn’t available. ANSI has been out 25 years and how much do we know about that? I vote it’s time for something new. Could it hurt to look?
I have been a real estate broker for 20++ years and have taken hundreds of hours of CE, the same classes are required in every two year cycle . . . classes like fair housing and license law . . . ethics every two cycles -over and over and over and over. Classes regarding measuring a house or reporting square footage have NEVER been offered, and I am in a very large MSA/market area. Its not the methods that are the problem, it is participation. Our local MLS finally required the SF field be filled on on all listing sheets several years ago, but then turned around and said “0” was an acceptable answer. ANSI is more than sufficient as is, getting the players to use it, or any method at all is the issue. Fix that! best of luck.
0 municipalities out of the dozens ive services have used a single “standard.” Implementing a single national standard would result in inconsistent units of comparisons for appraisers (which is THE standard required by FNMA). The only answer until a national standard for county records is implemented (ie never) is for the appraiser to use the standard of the municipality that the subject is being appraised in. Anything else would be non credible.
I’m sticking to the way the assessor does it. You can’t use comps accurately if the assessor does it one way and the appraiser does it the other way. We would have to measure the comparables. Doing a search for comps based on square footage would be a nightmare. This whole thing about this “made up” problem is nonsense.
Assessor? In my area that is the last pickle in the bottom of the barrel that we will use for GLA data, if there is no other reasonable data available.
Yes, but that is where all the realtors base their square foot totals. So, unless all 3 principles are in the equation, it won’t work. Right now is the best way of doing things. If an appraiser measures the subject, then fine. Go by that, but all the comparables are based on how the assessor measured it in the listings. For example, the appraiser measures 2300 sq. ft., but the same model in the assessment says 2400 sq. ft. and you want to use that as a comp. What are you going to do, measure the comparable too? You go by the assessor for the size because Realtors don’t measure the homes.
Just finished an appraisal where the property appraiser didn’t subtract out the 2 story foyer. 211 sf difference. I would suggest measuring personally to ensure accuracy. Not to mention they round their numbers. Just my humble opinion.
But If the assessor measured every property in that neighborhood and failed to subtract the second story of the foyer, your subject would then be shorted 211 sf of value.
Joe Lograsso it is common in my market to include the 2 story foyer but not 2 story family. I think each market is different. Also im pretty sure that is what I was taught 15 years ago in class
My market deducts 2 story great rooms. The foyer we don’t.
The Realtor is the last source that I rely on, since they are not data suppliers but marketers-this is not a criticism of sales people but a recognition that they are not impartial. When agents can site the source as “estimated, prior listing or owner” you have to know that it is not reliable. I have talked to many agents in my 31 years appraising that said that as long as they say estimated, prior listing or owner they have no liability. I have even had agents reference an appraisal as the source only to indicate when I questioned them that it was actually an appraisal that the prior owner said they had 10 years ago and that I probably should use the city assessing data that was 1000 sf smaller-since I indicated that I would refer to the agent as the source. Here in the Motor City you don’t let the marketing department (Realtors) handle the accounting or engineering functions (appraisers).
I wonder how many foreclosures have occurred because the appraiser didn’t use ANSI standards. You know, using ANSI the house is 2,476 sq.ft but the appraiser had 2,539 sq.ft. I would guess close to zero.
The truth of the matter Eric is that square footage (sf) errors have what I’ve coined a “cascade effect”. If an agent over inflates the GLA by 100 sf in the MLS, the data is not a single occurrence, but rather if appraisers don’t seek the truth, the error is often used by dozens of the appraisers to value other homes in the area. With my typical assignment being well over 1 million, this single error could result in an over evaluation of +$20,000.
For those who may have been coached to churn and burn 4 to 9 appraisals a day, or spend as little as 30 minutes doing review before sending it off, is the truth being sought? Are you reviewing all of the old MLS listings to look for enclosed patios, basements, or bonus room verbiage that magically become sf in future listings? Are you looking at those old listings and the room dimensions to potentially find a variance? Are you calling and or emailing the listing agent for proof and reasoning for the increased sf? Are you researching for permits?
To those who put profits before principles, the answer to the above questions are most often no.
Seek the truth.
4-9 a day????
no wonder majority of appraisals are total misleading garbage these days.
The single biggest driver of this is the Listing Services allowing the Listing Agents to put whatever they want in the listings with ZERO accountability for accuracy. They literally make it up in Northern Virginia. Some add basement, some add porches, some add from thin air, etc. They are never lower than actual. And THIS is the only square footage number that is posted publicly (zillow, etc no one in there right mind would go to a real estate assessment website (where’s the fun in that?)) for all to digest and assume to be accurate.
Appraisers need to seek the truth and have a backbone. Case in point. Today I measured a property at 1,340 sf, public records show 1,342 sf, the current MLS listing reflects 1,500 sf (estimated), and per shared peer data via A la mode, 9 of my peers reflect a sf of 1,500 (listing / pending comps).
Just because this investor ($550,000 / 10/20/2021), thinks they bought a magical stretching house, and many of my peers seems to agree, I have no problem issuing Tidewater ($715,000), and cutting value to $700,000. Fortunately, and or unfortunately, the increase in value is no magic trick.
Seek the truth.
Identical items with the same basic mass should not be artificially assigned varied weights. The assumption is that if a certain standard was applied to one, it was likely applied to the other. Clearly defined methodology is as good as it gets for now.
What a concept and possible amazing source of work, a uniform standard where all homes would be measured again. Wouldn’t that be something. I’ve often said, sketching is one of the more enjoyable tasks, if I could do this full time it would be really great. Only ranches though, lol.
Just found this, interesting.
The authors point is well intentioned, however, he seems to believe that the sources of data are for the same purpose. They clearly are not. Assessors data is for sole purpose of taxation. Assessors do not have access to the interior of homes and perform mass appraisals, not fee appraisals. Equalization is a key component of how assessors appraise property. Many localities do not require licensure and some Assessors or Commissioner of Revenue are elected with no experience. Realtors are sales people; of course they are going to use every inch of square footage to market the property. Finished basements are a good example of how a buyer perceives square footage and how a fee appraiser meets GSE guidelines.
Now in the fee world, we have nuances as well. What about condos where the square footage is part of the legal description or stated in the declarations? It does not matter what an appraiser measures. Some condos include decks, patios, storage unit and parking spaces in the declared square footage.
So no matter how well intentioned the author is, it is not realistic in any scenario.
Think about this for just a minute, if every source of square footage is exactly the same, would they need fee appraisals for reseidentisl properties. The technology is already in use and with out nuances of square footage, AVMS will only become more accurate.
When it comes to an inspection, I trust no one, for any aspect, but myself or my or a person I have trained. Why should I take the risk?
PROBLEM IS: many appraisers can’t even measure a property the correct way, or even learned how to do it properly.
This is bull! Do you know how many times I subtract stairs because that’s how the assessor did it? Fixed ANSI standards will result in slight over valuation and mismatching weights for otherwise identical properties. Will FNMA require all assessors and builders to follow this rule? Please. The oldest builder trick in the book is to overstate the size by including stairs on both levels, but many builders do not do that and do subtract the stairs. How to overstate your properties size and apply unwarranted adjustments in many counties, follow ANSI regardless of the improper logic behind that approach. How to guarantee inconsistencies within the FNMA CU database and spark unnecessary appraisal reviews; Boldly state the subject is larger than stated in county records due to arbitrary application of ANSI standards even though everyone involved knows very well that’s not how the assessor comes about the agla figure. Create an extra fifty to a hundred square feet out of just nowhere. Brilliant!
FNMA should reconsider, this is nonsensical and counter productive. One size does not fit all. Going to need sketch waivers now or to figure how to use this exception code all the time. What is wrong with matching the assessors figures if the assessor appears to have subtracted stairs? Does anyone know who the new mini dictator at FNMA is whom is applying hardline unflexible policies like some poindexter know it all? Would like to write that individual a letter or just point them to these threads. Yet another example of government systems mismanagement. It would be comical if this policy was not primed to create systemic deficiencies in many of my future reports because many local assessors does not appear to have followed these standards. What if I get a repeat service request, am I supposed to magically present a different agla figure? Please.