Get a hold of the Fannie Mae appraisal guidelines and familiarize yourself with what is considered living area - below grade areas ARE NOT CONSIDERED LIVING AREAS - including PARTIALLY BELOW GRADE. This is an asset, but not considered in GLA.
I have an appraisal section that might be worth a look - http://www.hrmiller.com/atlanta-appraisals.asp
This isn't rocket science.
As far as the double-dipping is concerned, the reason they would deduct for the 2 bedroom and the lower square footage is because of what is considered to be the functionality and appeal of a 2 bedroom vs. a 3 bedroom home. There are more limited buyers for a 2 bedroom. You would be looking for either an empty nester or family with 1 child most likely. This is a much more limited market. Even most young newly married couples want a house with at least 3 bedrooms.
It is true that in different areas of the country there are different adjustments used, but that is based on the value of the house, more than on it's location. I live on Long Island, in New York, and prices here can vary from $200,000 to multi-millions. Regardless of price range, what the appraiser has not done it seems is give credit for the finished area with bathroom. When I see appraisers adjustments for this I always feel that this is giving the most value for the cost involved in doing the work. You can put in a $50,000 kitchen, and it might improve your value $10,000, but finish your basement for $10,000 and it adds $5,000 to value. You should have gotten at least the $10,000 back for the finished basement plus the bathroom.
There are a lot of smart people on Trulia. Someone must have a good answer for this.
Then, I hope you will share the happy results with us!
And, this won't make you feel any better, but it's true: I recently had a deal, like yours, except that the appraisal came in at value. Good news, right? That's what YOU'RE hoping for, right Joanie!
Turns out the mortgage insurance company, not okay with them. THEY demanded that the appraiser find another comp with the same number of above-ground bedrooms. Our response involved a lot of profanity.
How did the appraiser address the basement space in their drawing?
It does sound a bit like double dipping, but you have to look at your market.
Does the absence of 150 feet effect you $5,000. That's a lot per square foot! You must live in Buckhead.
Does the absence of a bedroom effect you $5,000, ABSOLUTELY, chances are the square footage doesn't hurt you at all, but the bedroom is costing you 10K since most buyers aren't looking for a 2 bedroom home.
Remember it's all about perspective.
I have read some of these answers and there are two of you who have spent TOO MUCH TIME IN THE Basement! And you call yourselves "Professional Realtors", you need to take "Appraisal" CE so you know the rest of the story!
Read the Addendum. There should be an answer there.
But, it's not double dipping.
The room is 15 x 24 (with 5x10 of that partitioned for the bathroom). There are three windows, a staircase to the upstairs, and an exterior door. One window is 18" x 24", the other two are standard size house windows (roughly 24 x 28). The room is conditioned with the central heat/air, has recessed lighting in the ceiling, 6 outlets and a cable outlet.