ENTREPRENEURSHIP

Can Underground Rooms Be Listed As Square Footage?

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Mild Spoilers Ahead

Most characters in horror movies react in fear when they uncover a hidden room or a network of dark tunnels underneath their home.

But for one character, AJ Gilbride, in the sleeper horror flick Barbarian released last month, uncovering the dank passageways and creepy dungeon in his basement represented a moment of joy.

Justin Long plays a disgraced actor in the midst of a #MeToo-style scandal that has wrecked his career and wiped out his finances, sending him to Detroit to sell off his investment properties in order to pay his legal fees.

While staying in one of his properties, a well-manicured Airbnb in an otherwise bombed-out neighborhood, Long comes across a creepy secret basement room with a camera, a bed and a bloody handprint. When he pokes around further, he discovers a whole network of dark, unfinished tunnels below the property.

Instead of reacting in fear, the discovery results in some of the most memorable comedy seen in a horror movie in years, when the film cuts to Long searching “can underground rooms be listed as square footage” on the internet before embarking into the tunnels armed with a tape measure.

Inman looked into the realities of subterranean square footage and answered the questions to which Long’s character could have used some answers.

Can underground rooms be included in a home’s square footage?

As Long’s character found on his initial internet search, rooms that are underground or unfinished — along with enclosed porches, three-season rooms and garages — do not count as living areas and cannot be calculated toward a home’s total square footage.

Since the rooms he uncovered were both subterranean and unfinished, there’s no way they could have counted toward his square footage.

While the secret room and its environs cannot be included in the Gross Living Area (GLA), it can possibly be included in the Total Living Area (TLA), he discovers.

What’s the difference between GLA and TLA?

According to Appraisal Partners, Gross Living Area, or GLA, can be thought of as the finished, livable, above-ground space in a house that can be heated or cooled. Meanwhile, Total Living Area, or TLA, includes the below-ground space and possibly accessory dwelling units.

Above-ground or “above grade” living area is generally priced differently from below-ground or “below grade” living area, according to Appraisal Institue President Jody Bishop, meaning a hidden basement room can factor into the value of a house if it is a finished, functional space but at a lower rate than the rest of the house.

“While it might add value, if it were usable, functional space like the rest of the basement, then yeah it might add some more value but not at the same rate as the above grade area carries,” Bishop said.

For example, if the above-grade square footage of a house is worth $100 per square foot, the below-grade square footage may be worth $20 per square foot, Bishop explained.

In Gilbride’s case though, since the unhidden basement was largely unfinished and unlivable, it’s unlikely the even dingier, hidden dungeon and dirt tunnels would have done much for his property value.

Who can I go to with my unusual appraisal questions?

Bishop recommends looking up Senior Residential Appraisal (SRA) designated appraisers to deal with any quirky appraisal questions, such as hidden rooms and subterranean space. SRA-designated appraisers receive higher education and training and typically have more experience than other appraisers.

“They work in markets where it’s more unusual,” Bishop said. “Typically you don’t find them in the entry-level mortgage lending market, they deal with the unusual stuff.”

SRA-designated appraisers can be found on the Appraisal Institute’s website.

How do appraisers determine the square footage of a house?

As of April 2022, accredited appraisers are required by Fannie Mae to use the American National Standards Institute standardized property measuring guidelines for calculating square footage, which entails computer-generated sketches rather than hand-drawn ones and requires appraisers to show the calculations they used to determine the square footage.

The measurement system was adopted in 2022 to bring more consistency to the manner in which appraisers determine home value is based on GLA.

“Valuations of residential property correlate strongly with GLA, yet historically there has been little consistency in how appraisers determine it,” reads a Fannie Mae pamphlet explaining the change. “Our adoption of the ANSI standard for measuring, calculating, and reporting square footage creates alignment across market participants, provides a professional and defensible method for the appraiser, [and] allows transparent and repeatable results for the user of the appraisal report.”

Email Ben Verde

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