Student handout modules 1 & 2 - amended

LREC 2015 Mandatory CE
Course Developer: Cheryl B. Bella, MAI, AI-GRS 1
PROPERTY MEASUREMENT
AND PRICING
_______________________________
LREC 2015 Mandatory
Continuing Education
COURSE DEVELOPER: CHERYL B. BELLA, MAI, AI-GRS
Real Estate Appraiser & Consultant
cbella1@cox.net
(225) 933-7971
LA Certified General Appraiser #G 0394
Texas Certified General Appraiser TX 1380278 G
MODULE 1
ANSI Standard Details
What do you measure and
report as the area of a house?
TAUR
T = Total (all contiguous area)
A = Area (finished and unfinished)
U = Under (must have a solid base)
R = Roof (roof coverage must be consistent like
and quality, with finished ceiling)

HOUSE AREA BREAKDOWN
Total Area Square Feet
Living Area
Storage
Porch /Covered Patio
Other
Car Storage
Garage
Carport
Can you define
LIVING AREA?
Per NAR,
Living Area is
Not Defined

Per The Appraisal Foundation
Living Area is -
Not Defined
Per the US Air Force
Net Living Area is -
Generally defined as the floor area of the
living room, bedroom, bathroom, and
kitchen/dining area, measured from the
inside face of the room walls.
Per “AccuCoverage”
Living Area is -
The size of a home (in square feet) based
upon the exterior dimensions. This total
should include the square footage of the
main home as well as the square footage
of the wing or addition if one has been
specified.

Per the Queensland Government,
Living Area is -
The standard number of sheep and/or cattle
required to form a viable economic unit.
Consistency
How to get a copy of ANSI-Z765 –
http://www.homeinnovation.com/about/bookstore
Phone Number – (800)638-8556

Who is ANSI?
ANSI is the registered trademark of the
American National Standards Institute
ANSI is a central body responsible for
identifying a single, consistent set of
voluntary standards and verifying that the
principles of openness and due process
are heeded.
WHO CONTACTED ANSI?
NAHB –
National Association of Home Builders
In 1994, pushed primarily by Home
Builders Association of Greater New
Orleans, the NAHB Research Center
established a committee to develop
measurement standards for detached and
attached single family houses.
Who is represented on this
Committee? (partial excerpt)
American Assoc. of Certified Appraisers
The American Institute of Architects
The Appraisal Foundation
BOMA International
Bureau of the Census
Employee Relocation
RS Means (estimator)
Fannie Mae
Freddie Mac
NAHB
National Association of Realtors (NAR)
US Department of Energy
HUD

WHY?
Before adoption of the standard in 1996,
no nationwide standard existed in the
United States for measuring square
footage in single-family houses.
Commercial standards have existed since
1915.
Why do we need the ANSI
Standard?
Without ANSI, your only direction is whatever is
acceptable in your local market!
ANSI Provides
Uniformity in Method
And
Uniformity in terms
What Property Types are Covered
by ANSI-Z765?
Detached single-family houses
Attached single-family houses
(Note – A Condo is not classified as a single
family house)

Per ANSI,
Detached Single-Family House – A house that
has open space on all its sides.
Attached Single-Family House – A house that
has its own roof and foundation, is separated from other
houses by dividing walls that extend from roof to
foundation, and does not share utility services with
adjoining houses; may be known as a townhouse, row
house, or duplex, for example.
ANSI
HOUSE AREA BREAKDOWN
Finished Area
An enclosed area in a house that is suitable
for year-round use, embodying walls, floors,
and ceilings that are similar to the rest of the
house.
Unfinished Area
Sections of a house that do not meet the
criteria of “finished area”
How does this compare to our
market terminology?

ANSI TERMS VS. MARKET TERMS
FINISHED AREA
LIVING AREA
ANSI VS. MARKET TERMS
UNFINISHED
AREA
Covered Area
(attached)
Car Storage
(attached)
Storage
(attached)
Garage CarportPorch
Screened
Porch
Covered
Patio
Storage Room Workshop
ANSI - How to Measure?
Finished Area is measured to the “exterior
finished surface of the outside walls”, if
detached
Finished Area is measured to the “exterior
finished surface of the outside wall or
from the centerlines between houses” if
attached

Sky-Cam View of
Adjoining Areas
Townhouse “A”
(Finished Area)
Townhouse “B”
(Finished Area)
Sky-Cam View of
Adjoining Areas
Townhouse “A”
(Finished Area)
Townhouse “B”
(Finished Area)
Sky-Cam View of
Adjoining Areas
Finished Adjoining Unfinished
(Finished Area) (Unfinished Area)

Sky-Cam View of
Adjoining Areas
Living Area
(Finished Area)
Garage
(Unfinished Area)
Sky-Cam View of
Adjoining Areas
Living Area
(Finished Area)
Garage
(Unfinished Area)
Sky-Cam View of
Adjoining Areas
Living Area
(Finished Area)
Garage
(Unfinished Area)

Finished Adjacent to Unfinished
Where finished and unfinished areas are
adjacent on the same level, the finished
square footage is calculated by measuring
to the exterior edge or unfinished surface
of any interior partition between the areas.
Finished Areas – Further Clarified
Finished areas must be attached by other
“finished areas” in order to be included in
the finished square footage
Room accessed through garage - not included
Room accessed across carport - not included
Room accessed only from exterior stairway – not included
Detached structures – not included
Finished areas that protrude beyond the
exterior finished surface must have a floor
to be included (e.g. – flower pot window,
fireplace without base is not part of
finished area)
Finished Areas – Further Clarified

Finished Area is computed for each level
(areas of the house that are vertically
within 2 feet of the same horizontal
plane)
Make a distinction between finished
above grade and finished below grade
Ventilation and lighting are not specified
requirements of the ANSI standard –
refer to market standard
FINISHES
FOR WALLS AND CEILINGS
Painted gypsum wall board
Wallpaper covered plaster board
Wood paneling
Etc.
ANSI initially indicated that chemically treated flooring was
FINISHES FOR FLOORS
Carpeting
Vinyl sheeting
Hardwood flooring
Concrete floors with decorative
finishes, but do not include bare or
painted concrete

The ANSI Focus
Consistent Like and Quality Throughout
intended for year-round use!
MODULE 2
Comparable Analysis
RECAP PHYSICAL BREAKDOWN
Relate Physical Breakdown to CMA
What is a Comparative Unit?
Is it the same for all property types?
What and why for SFR?

Comparative Unit
The components into which a property
may be divided for purposes of
comparison
The best unit of comparison is the one that
results in the most narrow data set range
What is the known in every
transaction?
Sales Price
Seller (vendor)
Buyer (vendee)
Date
Recordation Information
Legal Description
Example: 15 sales ranging from
$200,000 - $400,000
Can you tell me the most probable price of a
house in this area?

Known
_________________
Why?
Comparative Unit Ratio:
Remember, this can only work with numbers!
What is the known in every
transaction?
Sales Price
What is the why?
That’s the game: test
comparative units

What is the unit of Comparison for
Single Family Residential Dwellings
in Your Market?
TOTAL AREA or LIVING AREA/
FINISHED AREA
PROBABLE PRICE OF
SINGLE FAMILY RESIDENTIAL
STRUCTURES IS MOST OFTEN
DRIVEN BY?
LIVING AREA
Units of Comparison for Various
Property Types – “price per?”
Nursing Home
Restaurant
Retail
Parking Garage
Trailer Park
Apartment

To Begin, compute this ratio for
each comparable:
Known (Sales Price)
_________________________
SF of Living Area
$200,000 - $400,000
SP/LA SP/LA SP/LA SP/LA
$115/SF $120/SF
Does this work every time?
No!
You must review the answers to determine
if you are reflecting the motivations of
buyers and sellers

Example:
House in a built-out high-demand
subdivision with no lots available for sale.
Subject is an older ranch style house.
Sales Price/SF of L.A. produces a wide
range conclusion.
What could potentially be the
denominator?
Example
A 4500 SF house in a neighborhood of
houses ranging from 2300-2600 SF.
The typical unit value in the neighborhood
is $115-$120
What is the likely unit value of the subject?
Using Unit Value to adjust for
unique characteristics
Competitive Houses sell for $100/SF
House sells with a pool for $330,000
House living area is 3000 SF
What is the value of the pool?

Computation
Other Extractions
Extra Lot Area
Guest House
Workshop
Etc.
Comparative Unit Analysis
is Key
Most accurate.
Reflects the actions of buyers and sellers.

Student handout modules 1 & 2 - amended

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Student handout modules 1 & 2 - amended