Finished Basements & GLA


The Coyle Group - Finished BasementThe other day, I was asked to speak to a group of Caldwell Banker Preferred agents at their sales meeting.  It was a lot of fun and some really great appraisal questions were asked.  One question jumped out at me and I’d like to share it with you because it comes up all the time.

 Is finished basement space considered part of the overall living space of a house?

 Good question.  My answer to that is…well, it depends on how you look at it.  If you’re a real estate agent or even a homeowner, chances are you are going to view that space much differently than an appraiser.

 Most agents and homeowners want to play up the positive attributes of a property.  So it stands to reason that the finished basement space should be lumped in with the above grade living area.  Bigger is better, right?  What’s more impressive, a 3,000SF house or a 4,500SF house? 

Well, appraisers view this situation a little differently.  You see, most appraisers will measure the square footage of a property using the American National Standards Institute’s (ANSI) guidelines.  Those guidelines state that any living space located below grade (by 1” or more) is to be considered finished basement space and, as such, is not to be included in the overall Gross Living Area (GLA). 

“Whoa, now!  That’s crazy” you are probably thinking. 

What if it’s a walk out basement?  Still finished basement space and is not include in the GLA.

What if it cost $100,000 to finish the basement and there’s a 12 person home theater, wine cellar, exercise room, guest bedroom and a full bath?  Surely, that has to be included, right?  Nope, still finished basement space and is not include din the GLA.

What if three sides of the basement have exterior walls and only one side is below grade?  Sorry, still finished basement space and is not included in the GLA.

So are you saying that finished basements have no value?  No, not at all.  Finished basements do add value to a home in most cases.  It’s just that the space will not be added to or valued the same as the above grade GLA.  On an appraisal report there is an entire area dedicated to the value added by a basement and any associated finished space in that basement.  The rationale being that most buyers within a given market will not value finished basement space the same as they would value above grade living spaces. 

The Coyle Group - Bsmt Grid

So as an Agent or Seller, what do you do?  Well, I recommend describing the two spaces separately in the MLS description.  For example, if the house has a combined living area of 5,000SF, explain that 4,000SF is above grade living space and that 1,000SF is in the finished basement.

For a copy of the ANSI Guidelines for measuring a home shoot me an email at

If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at  You can also contact The Coyle Group at 215-836-5500 or


FHA Protocols

The FHA has a number of appraisal inspection protocols which must be followed by FHA Appraisers.  Agents and Sellers should be aware of these inspection protocols as they may affect the appraisal and upset settlement timelines.  These protocols are intended to assure a level of due diligence that must be performed by the appraiser in order to property assess whether or not a property meets the Minimum Property Standards set forth by HUD/FHA.

The Head & Shoulders Test – this standard simply means that when inspecting attics, basements and crawl spaces an FHA appraiser must enter the space to “head and shoulders” level, at a minimum, to allow for a proper visual inspection. 

Mechanicals & Plumbing – all of the homes mechanical systems and plumbing must be turned on and available to be tested by the appraiser.  A representative sampling of switches, outlets and fixtures must be tested.  The heater must be operational.  If temperatures permit, cooling systems must be tested.  Water pressure and temperature should also be tested.

If for some reason, the appraiser cannot access any of these spaces or complete any of the necessary system tests, the appraiser must contact the lender and reschedule another inspection of the property at such a time that property access can be made.

This is where Agents and Sellers have to be proactive.  Make sure that these areas are readily and safely accessible to the appraiser.  Have a ladder ready for the attic inspection if there are no drop stairs.  Clear the access to the crawl space and have a light available to light up those dark corners.  Remove any personal property that could block these areas from access and view.  Make sure that all of the utilities are turned on and are ready to be tested.

These simple steps will save time and money.  The FHA appraisal process will move more quickly without having to schedule unnecessary reinspection appointments; and the appraiser won’t have to charge a re-inspection fee.