Portland Area Real Estate Appraisal Discussion

Why did the appraiser say my house is small
February 3rd, 2014 1:21 PM

A question appraisers are commonly asked is, “Why wasn’t my home’s entire finished area included in the appraisal report?” The answer is that often all of the area was considered, but appraisers regard finished areas partly below grade as basement, even if the area has daylight windows and is mostly above grade.

In the following two photos, you can see an example of a daylight basement that is mostly above grade on the rear of the improvement and mostly below grade on the front. The blue line in the photo represents the approximate grade for the property.

Front of Portland Home with Daylight Basement Rear of Portland Home with Daylight Basement

In the Portland area, properties like split-levels (two story bi levels), tri levels, and daylight ranches often have a large portion of finished, partly above grade basement area. The above grade finished area is usually considered as gross livable area (GLA) and is more prominently displayed in the appraisal report. The rest is considered as basement and is more difficult to find in the appraisal report.

The reason for separation of above and below grade area is to ensure that appraisers compare apples to apples. Lumping basement and above grade area together might lead to accurate value estimates in some cases but, for other properties lumping areas together could lead to an inaccurate comparison and value conclusion. Consequently, if it looks like the appraiser measured your home as too small, first check to see if part of your living area is compared in the basement area of the report with other properties that have similar basements. If not, there is usually a home sketch in the report with appraiser measurements that can be used for verification.

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Thanks for reading,


Posted by Gary Kristensen on February 3rd, 2014 1:21 PMPost a Comment

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Great info Gary! I know this is a topic that a lot of homeowners are confused about. You've done a great job explaining this.

Posted by Tim Packard on February 3rd, 2014 3:40 PM
This is very good information for any homeowner to understand.

Posted by LTW on February 3rd, 2014 3:50 PM
Nice Blog post. Clearly the best real estate appraiser in Portland!

Posted by Joe Orchard on February 3rd, 2014 4:32 PM
I just posted a video update to this blog: http://youtu.be/bxqbHadVyso

Posted by Gary Kristensen on February 13th, 2014 10:37 AM
Hi gary, Nice informative site! I am wondering if there are guidelines for the valuation of a walkout basement. I read in one place that the basement living sq ft is calculated at about 65% value of the above grade sq ft. Would you comment on this? Thanks! Liz

Posted by Liz Ellis on January 19th, 2017 9:13 AM
Hi Liz, That is a great question. The short answer is that there is no set formula for calculating an adjustment for anything. Any appraiser who says different is misinformed. The long answer is outlined in this blog post: http://www.aqualityappraisal.com/One+Real+Appraisal+and+Six+Ways+to+Support+One+Adjustment . In that post, I talk about supporting a GLA adjustment in many different ways. The same can be done for a basement adjustments. The trouble with basements is that they are all very different. As you pointed out, some are walkout, some are walkup, some are outside entry only, some have few and small windows, etc… I’ve been able to show with a great degree of confidence that in some markets, basements can be just as valuable as a second floor. Those properties tend to be newer homes built on a hillside where the basements are just as nice as the above grade, there are plenty of windows, and the only reason that the builder put a basement rather than a second floor is because of the side of the street that the home was built on. In other areas, basements can have very little value in relation to the above grade. The trick is for the appraiser to analyze the sales data and not apply an arbitrary percentage. Hopefully that helps.

Posted by Gary Kristensen on January 19th, 2017 12:01 PM


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