One of the many challenges homeowners face is not knowing the accurate square footage of their current home they are looking to sell or prospective home they are looking to purchase. A homes GLA or Gross Living Area can be difficult to determine and all too often what is reported on public records actually differs from what exists.
An inaccurate Gross Living Area or GLA can throw off a home’s price per square foot. If a home is significantly larger or smaller than what is recorded in the public record, that discrepancy can put buyers, sellers, and realtors in a challenging position. Larger homes with a more complex floor plan are difficult to measure alone.
There are primarily two standards of measurement that most appraisers and real estate professionals adhere to for determining GLA, the American National Standards Institute (ANSI) and Fannie Mae Guidelines. The American National Standards Institute (ANSI) is responsible for identifying a single, consistent set of voluntary standards. ANSI standards have been adopted by most MLS services and real estate agents. Fannie Mae guidelines are developed by the agency to create a standard that they require adherence to for the purchase of loans.
To determine the gross living area we must begin by determining what areas of the home qualify to be considered part of the GLA. This begins with defining above vs. below grade living area.
Per Fannie Mae:
For units in condominium or cooperative projects, the appraiser should use the interior perimeter unit dimensions to calculate the gross living area. In all other instances, the appraiser should use the exterior building dimensions per floor to calculate the above-grade gross living area of a property. Only finished above-grade areas should be used – garages and basements (including those that are partially above-grade) should not be included. We consider 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.
The above-grade finished square footage of a house is the sum of finished areas on levels that are entirely above grade. The below-grade finished square footage of a house is the sum of the finished areas on levels that are wholly or partly below grade.
As you see, both ANSI and Fannie Mae are consistent in their requirement that GLA be entirely above grade. However, Fannie Mae does allow for some exceptions to this rule. Fannie Mae states:
The appraiser may deviate from this approach if the style of the subject property or any of the comparables does not lend itself to such comparisons. However, in such instances, he or she must explain the reason for the deviation and clearly describe the comparisons that were made. So long as the appraiser can define consistent comparables with below grade and above grade areas, and they give reasonable cause, below grade areas can be included.
One example in our local market of when one of these exceptions may apply is with an earth home property, with these properties all of the living area is below grade. Another example may be properties with a walkout basement that back to a lake, with this type of property it is often times more desirable for the main living area to be on the lower level due to its access to the lake.
So while Fannie Mae does allow some exceptions, both ANSI and Fannie Mae generally agree that if any portion of the level is below grade it can’t be considered part of the gross living area of the home.