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How is the gross living area measured and calculated?

Gross Living Area

Appraisers must follow the Square Footage-Method for Calculating: ANSI® Z765-2021 (“ANSI standard") when measuring, calculating and reporting the gross living area and non-gross living areas (basement, additional structures, etc.) of the subject property for most property types. Appraisals requiring interior and exterior inspections must follow this standard; appraisals of this type performed without using this standard will not be acceptable. 

Note: The ANSI standard cannot be used to measure apartment-style units in condo or co-op projects; however, it must be used for any non-apartment style dwellings including townhomes, rowhouses, and other detached single-family homes. When measuring apartment-style units in condo, or co-op projects; the appraiser should use interior perimeter measurements. The ANSI standard also does not apply to two- to four-unit properties. 

The most common comparison for one-unit properties, including units in PUD, condo, or co-op projects, is above-grade gross living area and below-grade square footage. The appraiser must be consistent when reporting the finished above-grade gross living area, below-grade square footage, and room count. The need for consistency also applies from report to report. For example, when using the same transaction as a comparable sale in multiple reports, the room count and gross living area must not change.

When using sketching or 3D scanning software, the resulting output must also conform to the ANSI standard. See Exhibits for Appraisals in B4-1.2-01, Appraisal Report Forms and Exhibits for additional information on sketches and floor plans.

Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area. Fannie Mae considers 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 & Finished Rooms Below-Grade line in the Sales Comparison Approach adjustment grid.

Detached structures with finished square footage must be reported on a different line in the adjustment grid and not included as part of the subject's reported gross living area.

When the subject property has an area that does not meet the ANSI minimum ceiling height requirements, the additional square footage must be reported on an additional line in the adjustment grid and an appropriate market adjustment applied, if warranted. Additionally, the appraiser must provide and explanation in the report for how this area was handled in order to comply with the ANSI standard and also acknowledge any contribution of the additional square footage.

If the appraiser is unable to adhere to the ANSI standard they must enter "GXX001-" at the beginning of the Additional Features field of the appraisal and provide an explanation of why they were not able to comply. For example,  the appraiser is performing an appraisal in a state that requires adherence to a different measuring standard. Such loans may still be eligible for purchase by Fannie Mae.

For additional information, see B4-1.3-05, Improvements Section of the Appraisal Report.

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