On December, 15, 2021, Fannie Mae published an announcement titled “Standardized Property Measuring Guidelines” – Updated guidance, which stated – Appraisers will be required to use the Square Footage-Method for Calculating: ANSI® Z765-2021 (American National Standards Institute®) Measuring Standard for measuring, calculating, and reporting Gross Living Area (GLA) and non-GLA areas of subject properties for appraisals requiring interior and exterior inspections with effective dates of April 1, 2022 or later on loans sold to Fannie Mae.
This policy update will standardize the method used to measure, calculate, and report GLA and non-GLA areas of subject properties.
All footprint sketches and floor plans must be computer-generated (not hand-drawn), indicate all the dimensions needed to calculate the GLA and other required areas such as garage and basement, and show the calculations to demonstrate how the estimate for GLA was derived.
Fannie Mae recognized that although a strong correlation exists between property values and GLA, there was little consistency as to how GLA was determined. This was evidenced recently in a survey of appraisers attending a class on ANSI standards and provided eleven different techniques they use to measure a one-and-a-half-story residence.
Per Fannie Mae, data also showed that when a second appraisal was submitted on the same property appraisers would report a difference of greater than 10% more than 20% of the time; and 40% of all submitted appraisals reported the square footage exactly as reported in public records.
Additionally, Fannie Mae has identified the following benefits of a universal standard:
American National Standards Institute, inc.
Contact the Home Innovation Research Labs at homeinnovation.com, select Bookstore from the drop-down menu or Phone: 800-638-8556. Cost is $25.00 for an electronic copy.
So far at least two states have adopted ANSI standards for appraisers in some manner. Those states are: Kentucky, and Mississippi. There are states, like North Carolina, that have measurement requirements for other market participants like real estate sales agents.
In their December update, Fannie Mae listed some ANSI-related items for appraisers to consider when using the ANSI standard, which is provided below:
Yes. Appraisers should be aware of the following definitions found on page 1 in the ANSI Z765-2021 Standard.
2.1 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; for example – may be known as a townhouse, rowhouse, or duplex.
2.2 Detached Single-Family House: A house that has open space on all its sides.
2.3 Finished Area: An enclosed area in a house that is suitable for year-round use based upon its geographical region, embodying walls, floors, and ceilings that are like the rest of the house.
2.4 Garage: A structure intended for the storage of automobiles and other vehicles.
2.5 Grade: The ground level at the perimeter of the exterior finished surface of a house.
2.6 Level: Areas of a house that are vertically within 2 feet of the same horizontal plane.
2.7 Square Footage: An area of a house that is measured and calculated in accordance with the standard. When employing Metric or Standard International (SI) measurement units, the term floor area is used in place of square footage.
2.8 Unfinished Area: Sections of a house that do not meet the criteria of finished area.
No. Duplex is identified in the definition of Attached Single-Family House, however, ANSI would only be adhered to when appraising a singular-unit described as side-by-side houses in the ANNEX Commentary on ANSI Z765-2021 on page 4 of the ANSI Standard, and also described in the calculation of square footage, 3.3 – attached single-family finished square footage where it states (or from the centerlines between houses, where appropriate).
ANSI should not be used if the architectural design is an apartment or multifamily building.
ANSI identifies duplex as a semi-attached single-family residential home.
When measuring a condominium or co-op that is part of an apartment or multifamily building, Fannie Mae’s policy of using interior perimeter measurements for the subject property should be applied.
No, the requirements do not extend to outbuildings.
However, a separate computer-generated footprint sketch that includes exterior wall dimensions must be provided for each additional structure with room labels, if applicable.
if an appraiser is unable to adhere to the ANSI Z765-2021 standard due to reasons beyond the appraiser’s control, the appraiser will enter “GXX001” at the beginning of the Additional Features field of the appraisal report and provide an explanation of why they were not able to comply.
Example – a house that is built into a hill where exterior measurements are not possible.
Also – if the appraiser is performing an appraisal in a state that requires adherence to a different measuring standard.
Square footage calculation of single-family houses are made by using exterior dimensions.
When using English measurement units, the house is measured to the nearest inch or tenth of a foot; the final square footage is reported to the nearest whole square foot.
GLA for properties in local MLS systems and assessor records may not be ANSI-compliant. The appraiser may not know what method an MLS listing or assessor used to calculate the GLA. Through research and their knowledge of the local market, appraisers determine if the GLA provided through alternate sources should be adjusted. The adjustment process does not change the requirement to report subject GLA to the ANSI standard.
The area of both stair threads and landings preceding to the floor below is included in the finished area of the floor from which the stairs descend. (not to exceed the area of the opening in the floor). Openings to the floor below cannot be included in the square footage calculation.
To be included in finished square footage calculations, finished areas must have a ceiling height of at least 7 feet.
An exception would be
An excellent illustration is found in the Appraisal Institute course – Measure it Right-Using ANSI Z765-2021, which is also Figure 5 on page 10 of the ANSI Z762-2021 publication, shown below.
Additional note: To be ANSI compliant, the Entry Level must be reported as Below Grade finished area. To be counted as Above Grade Finished Area it must be entirely above grade.
The above grade finished area of a house is the sum of finished areas on levels that are entirely above grade.
Below-grade finished square footage of a house is the sum of finished areas on levels that are wholly or partly below grade. Per ANSI “Given the above-grade and below-grade distinction and the definition of grade, the committee acknowledges that this may result in houses that—depending on topography, design, or grade line—have no calculated above-grade finished square footage derived from the method of measurement employed by this standard.”
Finished areas that do not meet the criteria of calculated square footage such as those areas not connected to the house, unfinished areas, and other areas that do not fulfill the requirements of finished square footage but may be listed separately.
The portion of the house that is at or above-grade would be calculated as above-grade finished area and/or unfinished area. The portion of the house that is even partly below grade must be calculated as below grade finished area and/or unfinished area and would be reported in the Basement & Finished Rooms Below Grade in the Sales Comparison grid.
An excellent example is also illustrated in the Appraisal Institute course Measure It Right – Using ANSI Z7652021 and shown on the following page.
The illustration shows a split level detached SFR with four levels. Level 1 is unfinished below grade, level 2 is below grade finished, level 3 is above grade finished, and level four is above-grade finished.
Level 3 and 4 sould be reported in the sales comparison grid as 1040 sq. ft. Above Grade Room Count Gross Living Area.
Level 1 and 2 will be reported in the Basement and Finished Rooms Below Grade section of the grid – 572 sq ft finished and 468 sq ft unfinished.
No. To be ANSI compliant, the walk-out basement should be reported in the Basement and Finished Rooms Below Grade section of the Sales Comparison grid, similar to the illustration in the previous answer relating to a split level SFR.
Bay windows can be included in the finished area calculations if they extend from the floor to the ceiling and meet the minimum ceiling height requirements.
Yes, our clients do require a general statement in the report that the appraiser has adhered to the ANSI standard.
Per ANSI, to claim that you follow the ANSI standard you must include one of the three specific “Declarants” (Statement of Finished Square Feet) located in the standard; per ANSI, failure to provide the declarations…where applicable – voids any claim of adherence to the standard.
· Declaration #1 applies when the dwelling is measured from the exterior only and the interior was not accessed.
· Declaration #2 applies when the dwelling is measured per plans and specifications (e.g. blueprints)
· Declaration #3 applies when the dwelling is measured partially from the interior (e.g. second floors)
To obtain the ANSI Z765-2021, click here.