I’ll add a topic that seems to be a big deal with people refinancing. They bought a house believing that it’s a certain square footage based on what the realtor had in the MLS listing. The problem is that realtors do not have to follow the same standards as appraisers when calculating GLA, or gross living area. So, the appraiser comes out and measures the house and determines it to be 1200 ft.² , for example, but the realtor called it 1900 ft.² because they included the finished rec room in the basement in the total square footage.
The reason is that realtors don’t have to follow ANSI which is mandated by FNMA and FNMA rules must be followed for all bank loans. Now, when they originally bought the house, the appraiser for that loan followed ANSI but the buyer didn’t read the appraisal or didn’t know how to read the appraisal if they did read it. So, the appraisal was correct and the realtor was wrong and, in my opinion, misleading and negligent. However, the realtor is covered because of their real estate rules set down by the local board of realtors. Realtors are not required to measure the house they are selling, which is a bad thing because they don’t even know what they’re selling. That should be the first step and a basic requirement, in my opinion.
This is a huge issue with all appraisers, according to my reading of appraisal blogs and message boards. The realtors have a vested interest in making the house seem like it has more square feet. Realtors I deal with in central Ohio have also been known to pull the square footage from a source called Realist and they’re covered because Realist is now their source. All they need is a source to not held liable for the accuracy of the square footage. Realist often includes finished and/or unfinished basements and garages in the gross building area and that is correct because gross is building area includes every part of the house. Except, GBA isn’t true square footage and GBA no place in the documented square footage and I’ve seen realtors use GBA and grossly overestimate the square footage of the house with no recourse available against them for being wrong and misleading. To me, it’s a legal scam on the part of the real estate boards across the country and it’s bad for their industry as a whole. Buyers need to be very aware of this, in my opinion.
Here is a link to ANSI measuring standards, which appraisers follow nationally, and the ANSI calculations are what buyers should be paying attention to when they buy a house. The gist of it starts on page 6.
Post any questions you have about ANSI measuring standards for appraisers and I’ll do my best to answer them.
