Question on appraisal value of finished cellar/basement

405.06: Gross Living Area Home  Previous  Next The most common comparison for one-family properties (including units in PUD, condominium, or cooperative 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.  For units in condominium or cooperative projects, the appraiser should use 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.   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 and finished areas below-grade” line in the “sales comparison analysis” grid.  To assure consistency in the sales comparison analysis, the appraiser generally should compare above-grade areas to above-grade areas and below-grade areas to below-grade areas.  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.

Springs

in Appraisals 13 years and 2 months ago

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bkagawa | 13 years and 2 months ago

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Hi all – If a basement is fully finished and has windows and a door to the outside, is there a difference in terms of appraisal and price/square foot than an above-ground space?  From a quality of life standpoint it seems identical but I am wondering how this affects market value and financing.  Thanks!

slopemope | 13 years and 2 months ago

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We had two appraisals on two seperate occasions – one had a lower value for garden level, one didn’t (a year apart?).  Our garden does not have full kitchen / full bath though.  Keep in mind, the standard approach is to use several methods for valuation, including (imprefect) comps, and at the end the “highly skilled” appraiser “wings it”.  In past years, that would mean it should appraise at the contract price (banks did not want to lose the business).  Now it is a crapshoot, you’ve got the bottom of the barrel talent (in most cases one level removed from beeper sales).  At the end of the day the appraisers are dying for business, they are going to do whatever the particular bank wants to see (nothing over ask, nothing above a comp, etc)

Springs | 13 years and 2 months ago

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Slopemope-   You have no idea what you are talking about.  It’s kinda sad that some people reading your post may actually think what you say means anything.

JL923 | 13 years and 2 months ago

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I don’t know whether an appraiser factors a renovated basement into the value, but what i do know is that appraisers use the sales comp approach method. They find similar buildings (amount of units, sq footage) sold within the last 6 months and average the price. However, basements do not count towards a building’s square footage, so a renovatd basement will not increase a building’s worth nearly as much as a renovated apartment upstairs. That doesn’t mean a finished basement doesn’t add any value at all though. It wouldn’t surprise me if it added a little bit of value and maybe more if there were windows, a separate entrance, etc.

JL923 | 13 years and 2 months ago

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ditto on slopemope. steer clear.