Must the appraiser treat an addition or converted space as part of the Gross Living Area?

The Appraiser must treat room additions and garage conversions as part of the Gross Living Area (GLA) of the dwelling, provided that the addition or conversion space:

  • is accessible from the interior of the main dwelling in a functional manner;
  • has a permanent and sufficient heat source; and
  • was built in keeping with the design, appeal, and quality of construction of the main dwelling.


Room additions and garage conversions that do not meet the criteria listed above are to be addressed as a separate line item in the sales grid, not in the GLA.  The Appraiser must address the impact of inferior quality garage conversions and room additions on marketability as well as Contributory Value, if any.
 
The Appraiser must analyze and report differences in functional utility when selecting comparable properties of similar total GLA that do not include converted living space. When the Appraiser includes converted living spaces as GLA, the Appraiser must include an explanation detailing the composition of the GLA reported for the comparable sales, functional utility of the subject and comparable properties, and market reaction.

The Appraiser must not add an Additional Dwelling Unit (ADU) or secondary living area to the GLA.

 For additional information see Handbook 4000.1 II.D.3.d.iii available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh


All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-01253