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Real Property Appraisals/determination of grade level


Like many other, we just received our appraisal on our lake house with a walk out lower level. We have 4000sqft.  2500 up with 1bdr and 3 bdr down.  Of course they only appraised the top floor of 2500sqft.  My question is what determines that the lake level is not the grade level. We actually built up the land away from the lake to make the 2nd level  the entrance n the backside of the house.  The house is 3/4 stick built on the lake level.  I am just wondering what determines which level is grade level and so if we dug out around the house it would all be above grade?


From your description, I assume that your house is built on a down slope hill with the entry at street level & the house built down the down slope with 1500 SF on the walk-out lower level.

If this is not correct, you may have to send me some photos @

Technically, the appraiser is correct. HOWEVER, the appraiser had to include the additional 1500 sf in some manner, he/she just cannot ignore it. Again, technically it is considered "basement" and the area should be included on the basement line of the appraisal report as additional living area. It should be compared to other houses in your area that also have walk-out levels. The appraiser should verify that the comparable houses have similarly upgraded walk-outs, or make adjustments for superior or inferior walk-outs. What I describe above generally follows FHA Guidelines.

The above assumes that buyers in this neighborhood consider and pay for these areas as if they are basements. If buyers consider them to be part of the gross living area, then the appraiser should have appraised this as a 4,000 SF house. Unfortunately, you will probably not be able to get the appraiser to do the verification to determine this.

Appraisers are not paid enough and are not given enough time to think "outside-of-the-box" and do the analysis necessary to measure how buyers are considering these areas. Take a look at my prior responses where people like you have received incompetent appraisals. Search for "bad appraisals", "incompetent appraisals" , etc.

If you want to rebut this, you will have to do all of the work. I would first Google "Square Footage-Method for Calculating:ANSI Z765-2003". You will find a PDF of this article in the Internet. Once you read it, you will know more than the average appraiser about measuring houses. There are other methods that are used. Google: "Measuring houses", How to measure a house", any way you can think of to get other articles. Once you read these, you will know more about how to measure a house than the average appraiser.

Next find the most experienced real estate agent in your area & go see them. If you don't have a copy of the appraisal, get one - you are entitled to a copy. Take the appraisal to this agent and have them download client copies of the listings for each of the comparables the appraiser used. You want to make sure the appraiser properly analyzed each of the comparables. Then, have this agent download comparables that the appraiser did not use that are more reasonable comparisons.

While the agent is helping you, ask them how buyers are looking at the walk-out basements. Are they buying them as just "basement" type space, or are they including walk-outs into total gross living area? If they are including the area in gross living space, the appraiser should have included all 4,000 SF into living area. With this information, you are ready to submit a rebuttal to your lender and the appraiser.

In the appraisers defense, when the agent gets all of the data in your area, you just might find that the appraiser did a good job in valuing your house. I have had so many people like you have a problem with an appraisal that I usually jump to the conclusion that the appraiser is at fault. In this case, you'll have to accept that your house is not worth as much as you thought.

I have to tell you that even this won't ensure that you will get a proper analysis from the appraiser. They may dig their heels into the ground and tell you to go pound sand. The lenders will probably be of no help either. I am embarrassed by the way my so-called peers are practicing, but it is due to the lenders just hiring the "cheapest and fastest"  appraiser, not the most competent.

In this case, your only option would be to go to another lender and pay for another appraisal. This time, pay more attention to the selection of the appraiser, as best as you can, and try to find one who is better able to measure values in your area.

I wish you the best of luck in getting this resolved

John C. Carlson
CA Certified General Real Estate Appraiser
Victorville and Diamond Bar, CA  

Real Property Appraisals

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John C. Carlson


Any questions regarding commercial and/or residential appraising, appraisals or real estate valuation such as: appraising as a profession, valuation techniques, comparable sales selection & analysis, the new HVCC and how it affects appraisers & Borrowers. Also, questions like: "Why did my appraisal come in low & what can I do about it?" I cannot answer questions about comparable data in areas in which I do not practice. I have expertise in most areas of So. California.


31-years both commercial and residential valuation experience. State of CA Certified General Real Estate Appraiser, licensed to appraise all property types. FHA Approved. Specialized expertise with historic, architectural & luxury residential property valuation. Experienced in industrial building and small commercial property valuation. Experienced Reviewer of appraisal reports and expertise with intensive forensic reviews to uncover fraudulent appraisal reports. Expert Litigation and Expert Witness experience.

Associate Member of the Appraisal Institute. Associate Member of the Certified Fraud Examiners.

Numerous posts to Blogs. Please "Google" "John C. Carlson Real Estate Appraisals" where a list of responses I have made will show up.

Numerous classes by the Appraisal Institute since 1978 in the practice areas in which I specialize

Past/Present Clients
First Republic Bank Wells Fargo Bank California Bank & Trust Preferred Bank Numerous Attorneys.

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