Changing ANSI Standards in Michigan | DOBI

Changing ANSI Standards in Michigan

Everything You Should Know

Among many variables, the square footage of your home is a key factor that plays into how to estimate it’s worth as well as being a major criteria for the buyer. Recently a new standard for measuring “gross living area” has gone into effect by Fannie Mae for single family homes. This impacts buyers, sellers, and the entire real estate market so here’s what you need to know.

Why does this matter?

Appraisers for home loans that will be sold to Fannie Mae now have to follow this standard, and the standard can shrink the amount of square footage in your gross living area – which overall can reduce your appraised value.

There are two key changes that will impact homes in metro Detroit:

FIRST, any space that is partially below grade – even by a foot or two – is now to be reported as basement space. This impacts multi-level homes, like tri and quad level homes, that have levels that may be partially below-grade. Historically, those levels have been included in the gross living area for appraisal purposes.

Basement space IS given some value. But not nearly the value as above-grade space, which is what we use to calculate price per square foot.

SECOND, all finished areas included in gross living area must have a ceiling height of at least 7 feet. So, in a bungalow or cape cod home where the rooms have sloping ceilings, the portions of the room that have ceilings lower than 7 feet won’t be included in the gross living area. If more than 50% of the finished area of the room has ceilings below 7 feet, then the room won’t be considered in the square footage at all!

As of now, this new standard has not been adopted by other government lending institutions like Freddie Mac. So it’s important to be aware that we may see discrepancies in appraisal for a while. To learn more about this new standard, DOBI agent and associate broker, Alexandra Lannen walks us through what to know in the video below.