Why Doesn’t the Appraiser Include my Basement?!
- November 19th, 2013
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A common real estate myth that you may have encountered is that a basement adds nothing to your home’s appraised value. Some real estate agents even warn clients against finishing basements under the false belief that basement living space is not considered during an appraisal. Since finishing existing space such as basements or attics is considered one of the most cost-effective ways to increase a home’s living area, this misguided advice has the potential to rob homeowners of the full enjoyment of their homes. Your Salt Lake Appraiser Follows Established Guidelines To Value Your Home A related myth is that excluding basements from appraisal values is a regional practice. The truth is that Salt Lake City appraisers not only consider a home’s basement and its condition during an appraisal, they also follow a set of uniform industry standards.The Root of the Confusion The misconception concerning basement appraisals probably arises from confusion about the meaning of a common appraisal term. Your Salt Lake appraiser uses the term gross living area (GLA) to refer to the square footage of the portion of your home that is above grade. This measurement is based on the exterior measurement of the home- from the outside of the foundation to the outside of the foundation on non-condo properties. Many people, even real estate professionals, confuse gross living area with another common phrase, livable area. While a finished basement is certainly a part of your home’s living space, it is not included in its gross living area. Determining What is a Basement Sometimes it is hard to determine which parts of your home are basement areas. This is often the case with split-level homes or those with walk-out basements, especially if those areas are waterproofed, finished, equipped with egress windows and designed to be part of the home’s living space from the very beginning. For appraisal purposes however, your Salt Lake appraiser considers any portion of your home that is high enough for an adult to stand up in and is situated below the level of the soil outside the home to be a basement. This is true even if part of the basement walls are not covered by earth, such as is often the case with walk-out, or daylight, basements. Exception to the Rule In some areas of the nation, specifically in Park City, Utah, appraisers will include the basement area in with the GLA. The reason for this is twofold: First, most homes in Park City are built on steep slopes; such that often only one wall is partially below grade. The cost to put in and finish basements is reasonably the same as building and finishing the upper levels of the home. Secondly, the Park City Multiple Listing Service (the MLS service that most Realtors use in Park City) does not separate the area below ground level from the area above ground level- and so one does not know how much area is on each level. Reliance on Park City area assessor records also often proves inconclusive. This may be true for other parts of the nation as well- particularly in mountain areas. Appraising Your Basement’s Value Your Salt Lake City appraiser will consider your home’s basement during your appraisal. As with any other part of your home, the value of your basement will be based on considerations such as its condition, its age and the actual selling price of comparable homes in the neighborhood. Your appraiser will carefully assign a value to your basement’s square footage. In many cases, the value assigned to a basement is lower than the value assigned to the GLA, but in some cases it may be assigned a value that is equal to the GLA. Just because your appraiser doesn’t refer to your basement by the same terminology applied to other parts of your home does not mean the appraiser does not consider your basement valuable. We are happy to help, so give us a call. 801-260-2828