Susan

Hi Nora,
I'm not a real estate agent, but I have been in a very similar experience. We had a home sit on the market for a year and a half. Developers had come in and built lots of brand new, price-caped homes all around the area and the competition was to great. This may sound trivial but what finally worked for us was to paint the entire house and put some focus on our curb appeal while dropping the price again. (Just dropping the price never seamed to be enough) I don't know what your home looks like, but if there is anything you can do to make it stand out against the competition (curb appeal) it's worth it. I wish we had done this from the get-go! I also wish we had lowered the price much more and much earlier than we did. Two mortgages for almost two years is hard to swallow and we would have actually saved money if we'd lowered the price much more drastically early on. I'm not an agent or expert by any means, but I thought I would share with you my experience. :) Good luck! - Fri Aug 22 2008, 06:57

Question: How do you know the appraiser used is not licensed? If that is true, then you should be in contact with the state banking commission and the state board of appraisers to discuss that aspect immediately.

Ironically it was the bank that told us he was not licensed. What happened was the father sent the son to do the inspection and the father signed the appraisal. After they where "caught" the father attempted to come back to the property to cover himself (be able to claim he looked at it) we did not allow him to come out and the bank blacklisted him. The underwritter chose that appraisal for the refi despite all this. We have decided not to do the refi so we haven't persued it but it seams to me this would be illegal.

The realtor was very helpful, agreed that the downstarirs should be worth less, but did not understand why the bedroom and bathroom wouldn't be counted. Her advise was not to worry about the sq footage or worry about adding on to increase it but to focus on making the existing sq footage nicer. We have done alot of work and it looks great, my concern is that the living space (esp not counting the "basement" is a little small. We wanted to pull out some equity to expand an already covered and partially enclosed area to make a fifth bedroom int he basement, and it would be nice for us, and buyers, but appearantly it would add nothing to the value of the home. We do want to sell it and make some money off it someday and this puts a real wrench in our plans. What good would it do to add a room that won't count in an appraisal, after all a home buyer needs to qualify for the loan and I worry that we'd have to sell for less than we could if those downstairs rooms actually counted. The buyer would have to put down a hefty downpayment to get the 20% equity required by lenders and I worry most buyers couldn't do that. We put down a down payment but at the time we had another morgage and we thought that was why we needed it. Looking back we realized that we needed it becuase the appraisal came back at exactly the sale price. (I am now wondering if it wasn't artificially inflated) The appraisal when we bought in 2004 gave us 40$ more per sq foot then the one we just had after our extensive renovations! (that is really bugging me)

It's just all so inconsistent I'm having a bit of a time trying to sort it all out... - Wed Aug 20 2008, 08:32

I cannot contact the appraiser because I am not his client, the bank is. The bank is not returning our calls because they threw out the appraisal and went with an even lower one despite the fact that it was done by someone who was not licensed! Can they legally even do that? Use an appraisal from someone not licensed?

More info and what I have learned in the mean time is this:

The house is actually a Bi-Level, I have done some research and I know that modern bi-levels are built at grade, plus (ironically) in most parts of the country a bi-level is considered a two-story and the lower level is included in the GLA. Which for us is really the main issue, it is not a basement at all. It's not cheaper to remodel and it does not have any of the advantages or disadvantages of a basement.

The house is actually above the natural grade; dirt was filled in to make it more aesthetically pleasing just in the area of the garage and entrance. This is an area two – three feet deep and about ten feet wide where dirt was filled in to make flower beds and make the entrance more level with the street (as apposed to the natural grade) The dirt is held up by a retaining wall, definitely not the natural grade. Our most recent appraisal did state it was below grade, contrary to the first one.

Fannie Mae says the following about this subject.

Calculating gross living are and gross building area, page 21.

"We consider that a level below grade (and, thus, not calculated as part of the gross living area) if any part of the level is below grade, regardless of the quality of the finish or presence of windows."

The article goes on to explain that if including the basement living area in Gross Living Area is "customary" in your area, "explain the basis for this conclusion in your report and be consistent in your comparisons in the sales grid."

When we bought it was advertised in the MLS at full sq footage and included all bedrooms and bathrooms. I have read on the Internet that bi-levels and mountain homes typically include the lower level in the GLA. Does anyone know what the "rule" is for this area? I have tried to find city, county or state regulation on this and have gotten nowhere.

If we dig back out the few feet of filled in dirt that was put in front of the house will that alleviate the "basement" issue? It is completely doable and since most of it is above grade already it will look natural but is this a crazy idea? Have anyone heard of anyone ever doing this?

I know the idea of smoothing out the grade sounds a little drastic, but if we pull it off that 2,000$ cost will almost double the GLA and will bump the 3/2 up to a 4/3 possibly a 5/3. Including the downstairs sq footage in the GLA would at the very least increase the value by 40,000 (It blows my mind that they won’t count the bedroom and bathroom, I can understand they want to give the footage a lower value but I do not understand why it makes my bedroom and bathroom not count! they have windows, exits to outside, closets, heat and air... and are above grade! Only the garage is partially below grade) Section 1.19 Square Footage Specified: In April 2007, MLS Rules and Regulations reverted to prior methods recognized to determine GLA (Gross Living Area). What it means is “the lowest level of a home that rests on a below grade foundation, whether it be a standard, walkout or garden level is considered Basement Square Footage and is prohibited from inclusion in the GLA square footage field.” Yet it is customary for realtors here to include all levels in the GLA in MLS listings, which makes our comps not true comps on appraisals. Most home here are built on sloped lots and you have to work with it.

I’m quite sure we could make it look like right, I just wonder if anyone else has ever considered or done this.

Thank so much for any advise!!!!
We are having a realtor come and give us her opinion on the market value that should prove interesting. - Tue Aug 19 2008, 10:59

The fact that the bedroom and bathroom in the "basement" are not listed in public records has nothing to do with permits. They are not listed in public record because they don't count if they are in the basement. I own a home that is a bi-level and while it was listed as a 4/3 in the MLS, according to appraisers and public records it's a 3/2 with half the sq footage, because even though the lower level is mostly above grade, it's considered a basement and the Sq footage and the rooms don't count. - Tue Aug 19 2008, 12:10