Ask Henry

Functional Obsolescence, GLA
Henry,
Subject is a purchase marketed as 3,100 sq.ft. County has subject listed as 2,059 sq.ft. Appears subject possesses a finished upper level, apparently original and legal, which does not possess a bathroom.

I presume, at a minimum, that there is functional obsolescence? However, presuming the upper level is legally finished and otherwise of good quality, it's hard to compare to other properties with 3,000 sq.ft. that offer greater utility. Would you give partial value to upper level and not include in sq ft calculations?

Thanks
Rick Bacich
rickbacich@ssctv.net


Dear Rick,
It is not possible for me to give advice about specific properties. However, here are some thoughts that may be helpful. It is up to you to determine what the actual GLA is and use it as a basis for your appraisal. This is a separate problem from estimating what the value is. From what you say I see no reason not to include the upper area in the GLA. However you can give it less value than other parts of the house. You must make this judgment based on what is expected in your market area. You must describe what is causing a loss of value (if any) due to functional obsolescence.

HSH
askhenryharrison@revmag.com

Ask Henry

Indoor Pool

Dear Henry,

Would you include the GLA of an indoor heated pool within the GLA area if the pool is located on the lower walkout basement area?

Thank you.
Norma Nicholson
norma@nicholsonappraisalservice.com


Dear Norma,

The Fannie Mae GLA specifications are only guidelines and can be adjusted to reflect what is most common in your market area.

One GLA guideline is that only areas of the dwelling that are 100% above ground and heated and finished like the main part of the house should be included. I doubt the drafters of the original guidelines were thinking about indoor heated pools.

The important thing to remember is that whatever you do, you need to explain in detail in the appraisal so that the users of the appraisal and reviewers who has access to some other source of the property GLA measurement will not confused by the difference. This will also help explain the basis of any adjustments to the comparable sales based on the difference in GLA.

HSH
askhenryharrison@revmag.com