Measurement "Standards" VS. Units of Comparison
Ask any two appraisers what measurement standard they use, and you're likely to get as many answers. ANSI, AMS, whatever I feel like, the county standard, etc. Is there a "right answer?"
Fannie Mae's guidance on GLA has two vital words, "Comparison" and "Consistent." GLA is the most common unit of comparison between properties, and it is vital that appraisers be consistent. Imagine a home in a plan where the county has trusted the builder's plans to record their living area (I can think of a dozen off-hand). Builders typically include open to below space in their calculations of living area. An appraiser comes to appraise a home in the plan and uses ANSI or AMS and subtracts the open to below space from the calculation. Now the subject is 300 sf smaller than reported by the county. No big deal... until the appraiser selects comparables in the same plan that are now all inflated by approximately 300 sf and the home appraisal comes in 300 x adjustment/sf lower than it should.
In this case, the appraiser having an "absolute standard" led to a non-credible final opinion due to the analysis of flawed material facts. Appraisers must have and disclose their standard, but that doesn't mean that the standard is the same if they appraise in Alaska and overseas. Yes, this means more work - the appraiser must know the standard of the county, and in some cases the individual plan and be consistent with it.
There is a right way to measure a home - consistently with how the market measures the home. If 6ft tall cape cod 1/2 stories are commonly bedrooms in the market and reported as living area by agents and the county... then it's GLA. The whole point of measuring a home is NOT accuracy but comparison. If every home in a plan was measured 10% off of the actual square footage in the same direction, it wouldn't have a single impact on the value determination if properly analyzed. If however, the appraiser's drive for accuracy causes the subject to be measured 10% off of the standard for the plan, then the value conclusion will be inaccurate.
ANSI Nazis... AMS Comrades... put down your guides. There is a new standard in town. Consistent Units of Comparison.
DISCLAIMER: Everything above was written well prior to the FNMA announcement of ANSI being "required" in appraisals after April 2022. As only 3 states require their assessors to use ANSI, FNMA offered the following "exception" (its hard to consider something an exception to the rule, when the rule only applies 6% of the time):
Is there an exception process?
If the appraiser is unable to adhere to the ANSI Standard, the appraiser
will provide the code “GXX001 –” in the Additional Features field on the
appraisal form and must explain why compliance was not possible.
For example, berm homes with their entire square footage below
grade would be eligible for an exception. The appraiser must provide
justification for an exception, lenders are responsible for confirming
the appraiser provided an adequate explanation. Fannie Mae will
monitor for inappropriate use of exceptions (i.e., using methods other
than the ANSI standard for homes that have typical above grade