How to Measure a House Like a Pro

(or at least like an Appraiser)

It's snowing outside so I've decided today is a good craft day. Yep, just like the ones you did as a kid (and might still do with your kids today). First, you need to get a milk-carton or plastic jug.  Rinse it out thoroughly (nobody likes the smell of sour milk). Second, I want you to get a pen of some sort.  Okay, now draw a horizontal line around the carton about halfway between the top and the bottom. On the top half I want you to draw a door and some windows. Third, go dig a hole in your backyard and bury the carton up to the line you drew.

Finally, measure all four sides of the carton where it is sticking out of the ground and figure out the square inches of the carton. Let's assume for example that the carton is 5 inches by 5 inches. Doing the math, that is 25 square inches ABOVE GROUND. You've just figured out the Gross Living Area (GLA) for an ant that wants to move into the milk-carton house you just built.

GLA is the standard that appraisers use to measure homes (big or small). For years, there was no standard way to determine the size of a house.  But in 1976, Fannie Mae came up with the GLA system that became the standard of practice. The following steps are used to calculate GLA:

1. Measure around the outside of the house above the foundation.
2. In multi-floor houses, measure each floor and count each floor.
3. Include all above-grade habitable living areas.
4. Unless the basement is 100% above the ground level (i.e. not a spec of dirt against it), do not include it in the GLA, even if it is finished and heated like the rest of the house.

You might ask, "What about the area that is below the ground?" Doesn't the ant buying the milk-carton house get that area too? What if it's 100% finished and has 3 more bedrooms? From an appraisal perspective, the only thing that matters below the ground is the percentage that it is finished and the quality of that finish. The function of the finished basement rooms (whether bedroom or family room) has little effect on the value.

That's not to say that the finished below-grade square footage doesn't matter. I measure the basement area and it is included as finished or unfinished square footage of a home, but basements are not GLA. As an appraiser, I compare GLA to GLA and basements to basements. 

For example, a house with 1 bedroom above grade and 4 in the basement is not truly comparable to a house with 4 bedrooms above grade and 1 bedroom in the basement even if they have close to the same finished square footage.

Here's one more example. Two houses could have 1600 finished square feet and might not be at all comparable to each other. House number 1 could be a tri-level with 1200 sq. ft. of GLA and 400 sq. ft. of finished lower level (basement) area.  House number 2 could be a ranch with 800 sq. ft. GLA and 800 sq. ft. of finished basement.*

BOTTOM LINE: When you are dealing with a house, you want to make sure you know how big it is from the appraisal point of view. If you get it right to start with, you won't run into problems when it comes time for the appraisal. That's even more important when you are dealing with a milk-carton house and ant clientele. You don't want to make those little boogers mad by misrepresenting the house or you'll never have a peaceful picnic again.

*PLESE NOTE: There are other considerations that could make them comparable for appraisal purposes, but GLA is not one of them. Appraising is rarely quite that clear cut. In other words, don't hold me to that example. It's just a hypothetical.