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Reducing Appraiser Liability: Using the ANSI Residential Measuring Standards Presenter Byron Miller, SRA, RAA, MSSE Principal Appraiser BM Appraisals.

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Presentation on theme: "Reducing Appraiser Liability: Using the ANSI Residential Measuring Standards Presenter Byron Miller, SRA, RAA, MSSE Principal Appraiser BM Appraisals."— Presentation transcript:

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2 Reducing Appraiser Liability: Using the ANSI Residential Measuring Standards Presenter Byron Miller, SRA, RAA, MSSE Principal Appraiser BM Appraisals

3 Presenter Biography Byron Miller, SRA, RAA, MSSE - MN Certified Residential Appraiser - WI Certified Residential Appraiser - SRA Designated Member of the Appraisal Institute - RAA Designated Member of the National Association Realtors - BOD North Star Chapter of the Appraisal Institute - BOD Twin Cities Financial & Estate Planning Council (TCFEPC) - Instructor - Coursework Developer - Author - Software Developer

4 Seminar Objectives Discuss SFR Measuring Standard Discuss MFR Measuring Standard

5 ANSI Z Single-Family Residential Measurement Standard

6 Z Overview  Motivation for Standard  ID Five Causes of Measuring Errors  Present Major Components of Standard  Examples

7 Quiz Calculate first floor area of home – First floor area  Base Area: First Floor  40’ X 26’  Bump-out: floor-ceiling height 6’ 8”  20’ X 4’  Fireplace Bump-out:  8’ X 4’  Stair Opeining  6’ X 8’

8 Quiz Floor Plan

9 Which is the correct area?  1040 SF  1112 SF  1080 SF  1032 SF  992 SF

10 Quiz Answers 1040 SF for gross area  40’ X 26’ = 1040 SF 48 SF for Void Area  6’ X 8’ = 48 SF 992 SF for total finished area  1040 SF – 48 SF = 992 SF

11 Organization Background ANSI: American National Standards Institute  Oversees Standards Development  Non-Profit  Established 1918  125,000+ Member Companies

12 Organization Background NAHB: National Association of Home Builders  Enhance Housing & Building Industries  Provide Affordable & Safe Housing  Established 1942  140,000+ Member Companies

13 Motivation Why do we need a measuring standard?

14 Motivation What is it? –Voluntary Guidelines for describing, calculating, measuring, and reporting of area for Single Family Residential (SFR) attached, detached & semi-detached (Duplex) homes.

15 Motivation In the beginning…

16 Motivation There was…, Gross Living Area (GLA) “Total area of finished, above-grade residential space; calculated by measuring the outside perimeter of the structure and includes only finished, habitable, above-grade living space. (Finished basements and attic areas are not generally included in total gross living area. Local practices, however, may differ).” The Dictionary of Real Estate Appraisal, 5 th ed.

17 Motivation Why do we need it?  Inconsistent Measuring Methods Exterior area Measuring Interior area Measuring Mixture of both

18 Motivation Why do we need it?  Different Measurers & Uses Appraiser Assessor Realtor

19 Motivation Appraiser

20 Motivation Assessor

21 Motivation Realtor

22 Motivation Why do we need it?  Differing SF Measuring Methods Cause Confusion Inconsistent Results Conflict

23 Motivation One of the most common reasons appraisers & realtors get sued is over measuring disagreements

24 Motivation Consistent measuring methods reduces liability

25 Motivation History Behind Z765 Standard  Building Owners & Managers Association (BOMA) 1915 develop commercial building measurement standard Current Version: Z (Commercial buildings)  NAHB 1994 NAHB research begins work on residential standard First Version: Z Previous Version: Z New Version: Z – Summer 2013

26 Motivation Z765 Participants (partial list)  Appraisal Foundation  American Institute of Architects  Consumers Union  Employee Relocation Council (ERC)  Fannie Mae  Freddie Mac  HUD  International Code Council  Manufacturer Housing Institute  National Association of Home Builders (NAHB)  National Association of Realtors (NAR)  Veterans Administration

27 Motivation States that use ANSI Z765 (partial list)  Alabama  Arkansas  Colorado  Kentucky  Louisiana  North Carolina

28 Five Deadly Measurement Sins

29 Five Causes of Measurement Errors  Measuring Issues  Missing Gross Living Area (GLA)  Counting Non-GLA  Complex Floor Plans  Inaccessible Measurements

30 Five Deadly Measurement Sins Five Causes of Measurement Errors  Measuring Issues  Equipment Failure  Measuring Wheels  Fiberglass Tape Measurers  Laser Measurers

31 Five Deadly Measurement Sins Five Causes of Measurement Errors  Equipment Failure Example  Elongated Wheel

32 Five Deadly Measurement Sins Five Causes of Measurement Errors  Measuring Issues  Equipment Failure  Measuring Wheels  Fiberglass Tape Measurers  Laser Measurers  Squaring Error

33 Five Deadly Measurement Sins Five Causes of Measurement Errors  Squaring Example #1  Easy!

34 Five Deadly Measurement Sins Five Causes of Measurement Errors  Squaring Example #2  Easy, Right?

35 Five Deadly Measurement Sins Five Causes of Measurement Errors  Missing Gross Living Area (GLA)  Four Season Porches  Bonus Rooms  Excluding Stairs  Hallways (extending to unfinished spaces)  Mother-in-law Units (attached through finished hall)

36 Five Deadly Measurement Sins Five Causes of Measurement Errors  Counting Non-GLA  Three Season Porches  Decks  Patios  Non-attached Auxiliary Buildings  ie: Mother-in-law units above a detached garage  Garages  Below-grade  Including Stairs (double dipping)

37 Five Deadly Measurement Sins Five Causes of Measurement Errors  Complex Floor Plans  Upper level footprint doesn’t match main footprint  Interior Cavities/Dead-space in walls  Difficult Geometries  Multi-Level Homes  Completely Above-grade  Partially Above-grade

38 Five Deadly Measurement Sins Five Causes of Measurement Errors  Inaccessible Measurements  Upper Stories: two and above  Condos  Attached Townhomes  Not accounting for wall thickness

39 Z Components Components of the ANSI Z765 Standard

40 Z Components Components of the ANSI Z765 Standard  Definitions  Area Measurement & Calculation  Area Reporting

41 Z Components Components of the ANSI Z765 Standard  Definitions  Attached Single-Family Residential (SFR) Home  A house that has its own roof & foundation, and is separated by dividing walls that extend from the roof to the foundation. The house does not share utility services with other attached houses.

42 Z Components Components of the ANSI Z765 Standard  Definitions  Detached Single-Family Residential (SFR) Home  A house with open space on all sides

43 Z Components Components of the ANSI Z765 Standard  Definitions  Habitable Space  A space in a building for living, sleeping, eating or cooking. Bathrooms, toilet rooms, closets, halls, storage or utility spaces and similar areas are NOT considered habitable spaces. International Building Code (IBC)

44 Z Components Components of the ANSI Z765 Standard  Definitions  Habitable Space  A space that is usable year-round. Interpreted definition ANSI-Z765

45 Z Components Components of the ANSI Z765 Standard  Definitions  Finished Area  An enclosed area in a house that is suitable for year-round use that is consistent with the rest of the house

46 Z Components Components of the ANSI Z765 Standard  Definitions  Unfinished Area  Sections of the house that do not meet the criteria of finished area

47 Z Components Components of the ANSI Z765 Standard  Definitions  Grade  The ground level at the perimeter of the exterior finished surface of a house.

48 Z Components Components of the ANSI Z765 Standard  Definitions  Level  Areas of the house that are vertically within two feet of the same horizontal plane.

49 Z Components Components of the ANSI Z765 Standard  Definitions  Square Footage (SF)  Area of length X width. Units in square meters using Metric (Standard International) measurements, or square feet using English measurements.

50 Z Components Components of the ANSI Z765 Standard  Definitions  Finished SF  Same as finished area, although not a Z765 definition.

51 Z Components Components of the ANSI Z765 Standard  Definitions  Unfinished SF  Same as unfinished area, although not a Z765 definition.

52 Z Components Components of the ANSI Z765 Standard  Definitions  FNMA definitions. Not defined in Z765 standard but presented here for reference.  Gross Living Area (GLA)  Below-Grade SF (BSF)

53 Z Components Components of the ANSI Z765 Standard  Gross Living Area (GLA)  For units in condominium or cooperative projects, use interior perimeter unit dimensions to calculate the gross living area. In all other instances, use the exterior building dimensions per floor to calculate the above-grade gross living area of a property. Only finished above- grade areas should be used— garages and basements (including those that are partially above-grade) should not be included. FNMA Guidelines: XI, (11/01/2005)

54 Z Components Components of the ANSI Z765 Standard  Below-grade SF  Consider a level to be below-grade if any portion of it is below-grade— regardless of the quality of its “finish” or the window area of any room. Therefore, a walk-out basement with finished rooms would not be included in the above-grade room count. FNMA Guidelines: XI, (11/01/2005)

55 Z Components Components of the ANSI Z765 Standard  Definitions  Garage  A structure intended for the storage of automobiles and other vehicles.

56 Z Components Components of the ANSI Z765 Standard  Measurement & Calculation of Area  Units of Measurement  Attached SFR Finished Area  Detached SFR Finished Area  Above- & Below-Grade Area Distinctions  Above- & Below-Grade Finished Area  Openings to Floor Below Area  Ceiling Height Requirements  Building Protrusions

57 Z Components Components of the ANSI Z765 Standard  Reporting of Area  Rounding  Above & Below Finished Area  Above & Below Unfinished Area

58 Where the Rubber Meets the Road Examples

59 Where the Rubber Meets the Road Example #1  1- Story 26’ X 40’, Flr-Ceiling Bump, No Bsmt SF Above-grade

60 Where the Rubber Meets the Road Example #2  1-Story 26’ X 40’, Bay Window Bump,No Bsmt SF Above-grade

61 Where the Rubber Meets the Road Example #3  1-Story 26’ X 40’, Bay, 25% below-grade Bsmt SF Above-grade, 1040 SF Below-grade

62 Where the Rubber Meets the Road Examples #4  2-Story 26’ X 40’, Bay, Bsmt + 6’ X 6’ Open Foyer 2044 SF Above-grade, 1040 SF Below-grade

63 Where the Rubber Meets the Road Examples #5  2-Story 26’ X 40’, Flr, Bsmt + 6’ X 6’ Open Foyer 2044 SF Above-grade, 1076 SF Below-grade

64 Where the Rubber Meets the Road Examples #6  2-Story 26’ X 40’, Flr, 25% below-grade Slab 1040 SF Above-grade, 1076 SF Below-grade

65 ANSI Z Where to find: 

66 Questions to Ponder ANSI Z Questions

67 ANSI BOMA Z Multi-Family Residential Measurement Standard

68 Measuring Multi-Family Residential Properties Using BOMA Z65.4

69 Z65.4 Overview  Scope  Key Features  Applicability  History  Definitions  Z Synopsis  Example

70 Z65.4 Scope 4+ Unit Residential Measurement Standard for – Measuring – Calculating – Reporting  Seven Types of Building Area  Any ideas what they are?

71 Key Features Flexible – Individual Units | Whole Building Consistent – Standard Rules for Measuring & Reporting Area Two Measuring Methods – Gross – Net

72 Building Types

73 BOMA History National Association of Building Owners and Managers – Founded 1907 – Changed name to BOMA in 1968 Information source – Bldg. Codes, Legislation, Statistics, & Technology 16,500+ members

74 BOMA Z65.4 History Z Office Bldg. Standard – Original Standard Circa Z Industrial Bldg. Standard Z Gross Area Bldg. Standard Z Multi-Unit Res. Standard Z Retail Bldg. Standard Z Mixed-Use Bldg. Standard

75 Quiz Calculate the Following for a Unit: – Construction Gross Area (CGA) – Void Area  Wall Width:  2’ thick between living units  1’ thick otherwise

76 Quiz Floor Plan

77 Which is correct for CGA?  1040 SF  1144 SF  1077 SF  1024 SF  None of the above

78 Quiz Answers 1077 SF for Construction Gross Area (CGA)  41’ X 22’ + 11’ X 11’ + 9’ X 6’ = 1077 SF 100 SF or 121 SF for Void Area  10’ X 10’ = 100 SF (Net Method)  11’ X 11’ = 121 SF (Gross Method)

79 Z Definitions

80 Definitions Building Perimeter – External perimeter around level or floor Center Line – Mid-point of wall Common Area – Shared by two or more units Construction Gross Area (CGA) – Total area of all floor calculated using perimeter

81 Definitions

82 Demising Wall – A wall between areas; may be same or different Finished (wall) Surface – Face of wall | window; painted or clad wallboard Limited Common Area – Private balconies, decks, patios, or porches Living Unit – Residential Habitable Unit

83 Definitions

84 Major Vertical Penetrations (MVP) – Floor opening for ductwork & building utilities  More than one SF | 0.1 Sq. Meters  Located anywhere in CGA Multi-Unit Residential Building – Building with 4+ residential Units  Includes: corridors, lobbies, parking, stairs, & storage

85 Definitions

86 Occupant – A person(s) living or squatting in a living | storage unit Occupancy Voids – An opening between floors in a single living unit  Includes: stairs, elevators, and dumwaiters Unit Gross Area (UGA) – Overall area of either living or a storage unit  Method A, discuss in a bit

87 Definitions

88

89 Restricted Headroom Area (RH) – Area in living unit that does not meet IBC minimum ceiling height. Storage Unit Area (SU) – Enclosed area used for storage  Not part of or connected to living area  May be unfinished, have restricted headroom, limited building services, & not suitable for a use as living unit

90 Definitions

91 Structured Parking Area (SP) – An attached enclosed vehicle storage structure  Excludes off-street uncovered parking, on-grade parking below an elevated building, and carports  Detached parking garages are considered separately Unit Net Area (UNA) – The net area of a living unit or a storage unit  Method B, discussed in a bit.

92 Definitions

93 Void – An open air space where a floor is expected  Not part of CGA  Void Examples: atriums, and 2-story foyers  Major vertical penetrations are not voids  Different from occupant voids

94 Definitions

95 Z Definitions

96 Meat & Potatoes How to Apply Z

97 Meat & Potatoes Overview of Standard – Unit Gross Area Method: Method A – Unit Net Area Method: Method B

98 Meat & Potatoes Gross Method: Method A – Measures gross area of unit Net Method: Method B – Measures net area of unit Measurement Rules – Must explicitly specify which method used – Z65.4 does not specify units | precision Standard Application same for either Method

99 Meat & Potatoes Four Steps in apply Z65.4 Standard – Determine CGA – Partition area by type for each floor – Determine boundaries of each type of space – Calculate all areas and tabulate

100 Meat & Potatoes

101 Four Steps in apply Z65.4 Standard – Determine CGA  Measure | Plans & Spec  Building perimeter boundary  Calculate Gross Area of each floor  Based on building perimeter boundary  Sum all floors

102 Meat & Potatoes Four Steps in apply Z65.4 Standard – Partition area by type for each floor (ID only)  Seven types of area  What are they???

103 Meat & Potatoes Seven Types of Areas – Major Vertical Penetration – Structured Parking – Living Units – Restricted Headroom – Limited Common Area – Storage Unit – Common Area  Voids aren’t considered a space, since they’re not part of CGA

104 Meat & Potatoes Four Steps in apply Z65.4 Standard – Determine boundaries of each type of space  Figure out wall measuring point  Interior finished side; also called near-side  Exterior side (finished | unfinished); also called far-side  Mid-point of wall  Use Wall Priority Diagrams to decide measuring point

105 Meat & Potatoes

106

107

108 Four Steps in apply Z65.4 Standard – Calculate all areas and tabulate  Calculate areas: Net | Gross method | both methods  Tabulate areas of each type by:  Individual units; Net | Gross | both  Each floor  Sum all  Report in Global Summary of Areas form | similar form  Report units in feet | meters  Round to nearest square foot | square meter  Standard suggests follow steps in order

109 Meat & Potatoes

110 Putting it all Together

111 Calculate the Following for Unit A: – Construction Gross Area – Unit Gross Area – Unit Net Area – Major Vertical Penetration Area – Common Area – Limited Common Area – Void Area  Wall Width:  2’ thick between living units  1’ thick otherwise

112 Putting it all Together

113 1077 SF; Construction Gross Area (CGA)  41’ X 22’ + 11’ X 11’ + 9’ X 6’ = 1077 SF 1023 SF; Unit Gross Area (UNA)  41’ X 22’ + 11’ X 11’ = 1023 SF 900 SF; Unit Net Area (UGA)  40’ X 20’ + 10’ X 10’ = 900 SF

114 Putting it all Together 64 SF for Major Vertical Penetration (MVP)  8’ X 8’ = 64 SF 167 SF for Common Area (CA)  11’ X 21’ – (8’ X 8’; elevator) = 167 SF 56 SF for Limited Common (LC) Area  6’ X 9’ = 54 SF 100 SF for Void Area  10’ X 10’ = 100 SF (Method B)

115 Putting it all Together

116 Wrap-Up Questions

117 Fini! ANSI BOMA Z : Multi-family Measurement Standard

118 ANSI BOMA Z Where to find: 


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