No. Any finished area in your basement is not counted in the total gross living area (GLA) of your home. When completing an appraisal, the basement area, which is below grade (or below ground) is always considered as separate living space in the sales comparison grid of the appraisal report. It’s important to understand that appraisers consider the basement area, finished or unfinished, separately mainly because Fannie Mae requires that only the above grade (above ground) living areas be included in the GLA calculation.
It makes sense in terms of comparison to separate above grade and below grade living areas. First, many basements are not finished with the same quality as the above grade living space. Second, there can be limited access to exits such as windows and doors. In addition, there are other factors that could have an affect on below grade areas but not above grade areas. Therefore, the differences between the above grade and below grade areas have to be accounted for and adjusted separately.
How is the basement accounted for in the appraisal report?
In the improvements section of the appraisal report report form, a box is checked stating your home's foundation type, such as full basement, partial basement, crawl, or slab. If there is a basement, we also fill in the size, percentage of area finished and some other basic information.
In the sales comparison approach section, there is a line for comparing “Above Grade Room Count and Gross Living Area.” Just below that line is a line for comparing “Basement & Finished Rooms Below Grade.” This is where appraisers make market adjustments to reflect the value impact of a basement’s size, finished area, quality, room count etc.