The size of a home — i.e. the square footage — is a big player in its appeal, value, and general marketability. It’s also where disputes tend to arise, largely because there are some variations in how that dwelling size is calculated. That’s why understanding and observing industry-accepted terms to define the size of a home are really important.
“Gross Living Area”
Appraisers use three ways to determine the value of a home, all of which are outlined in the Uniform Residential Appraisal Report, the industry standard promoted by Fannie Mae and Freddie Mac. That report form describes “gross living area” instead of “square footage” for the size of a home.
While agencies like Fannie Mae, Freddie Mac, and the Federal Housing Administration all have their own definitions of gross living area, they can agree on the following:
- It describes the finished, above-grade residential area.
- It doesn’t include unfinished spaces or areas that are unlivable, such as stairwells and landings. This applies above or below grade, which means areas partially or completely below grade, like walk-out basements, aren’t included.
- Areas that aren’t accessible from inside the main dwelling — garages, patios, finished areas, porches — aren’t included.
But what about my finished attic or my addition, you’re thinking. Those can be included in gross living area if they tick a few boxes — they must be accessible from the interior of the main dwelling, with a permanent, sufficient source of heat, and they need to have a design and construction quality that’s similar to the main dwelling. For finished attics in particular, the FHA has regulations about minimize celling height over a certain percentage of the area’s floor space.
So what’s the problem? Issues tend to arise because state and county public record standards don’t always align with the definitions above. Some states abde by a national voluntary standard for calculating square footage instead. When discrepancies come up between an appraiser’s report and a certain data point, the difference must be clarified.
Fortunately, the lending agencies mentioned above do recognize that there are exceptions to their rules. For a seller, partnering with an experienced real estate agent who can walk you through all the intricacies of square footage and how it relates to gross living area and ultimately, to market value, is always helpful.