Gross Living Area (GLA)

Over the years the residential real estate term Gross Living Area (GLA) has come to mean different things to different people. Some folks would say that a “daylight” or walk-out basement qualifies as above grade and therefore should be included in the GLA of the property. Others might argue that the lower floor of a split-level home is above grade. To settle this dispute, and get everyone on the same page, we will reference the Fannie Mae Selling Guide (current version: 12/01/10).

The Fannie Mae Selling Guide (B4-1.4-14, Appraisal Report Review: Layout, Floor Plans,and Gross Building and Living Areas) states the following:

A level is considered below-grade if any portion of it is below-grade—regardless of the qualityof its finish or the window area of any room. A walk-out basement with finished rooms would not be included in the above-grade room count. For units in condo or co-op projects, the appraiser must use interior perimeter unit dimensions to calculate the gross living area. In all other instances, the appraiser must use the exterior building dimensions per floor to calculate the above-grade gross living area of a property. The following must be observed when calculating and reporting above-grade room count and square footage for the gross living area:

•  Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area.

•  Garages and basements, including those that are partially above-grade, must not be included inthe above-grade room count.

These are the guidelines that InsideValuation and our customers reference when reviewing properties.  We hope this helps clear things up!

Until next time, take care!


About saraschlosser

Sara Schlosser is the Community Manager at InsideValuation.


  1. Marvin Von Renchler

    I think its utterly ridiculous. Split entry, daylight basements, lower levels of homes built down the side of a parcel of sloped land, if correctly finished to living space code, HAVE to be considered. In the Portland OR area, most properties are multi level and many are the classic daylight basement (which should not even be called ‘basement’ or built on two to four levels because of land grade. All this is actual living area and that how they have always been valued for sales. To only consider above ‘grade’ can turn a 4 bedroom home into a one bedroom for comp purposes which throws everything off. I dont think exterior BPOs should be allowed. They are inherently inaccurate

    • Hello Marvin,

      Thank you for sharing your opinion on this subject!

      Split entry, daylight basements, lower levels of homes built down the side of a parcel DO add value; we agree! This guideline is simply an industry standard for calculating the above grade section of the report. We do however take all of the items you mentioned into consideration when reviewing these reports, so even though we can’t technically call that square footage “above grade,” we do look to be sure that you are comparing apples to apples with regards to your comparables. Please, always feel free to add the total square footage to the notes sections so we can show that bank just how valuable these homes are.

      Thanks again, you feedback is very important to us!

  2. Susan Louisignau

    I have been appraising almost 30 years. Much of my territory is in a ski resort area. The market recognizes “below grade” first floor quality finished areas as living space. Personally I do not see the reason to follow FNMA guidelines —- look whom we’re talking about! An agency the bears most of the responsibility for this mess. I just can’t see it! These “lower levels” usually offer lots of light, walkout, excellent quality of finish etc…… It is not unusual to have the kitchen, living room, bath, bedroom etc….. on that lower level — Yet FNMA wants us to not consider it GLA. I have actually gone both ways —- when I feel I can swing it I call it all GLA and have the comps/listings that are the same. I have a FNMA requirement stating that larger windows etc……. and you can consider it such. I suppose the above overrides this but it’s just not accurate — raised ranch and split level houses often are in the same situation regarding the floor plan. It should be the appraiser’s decision especially if this “design” is typical for the area and you have houses offering the same. I am an SRA with the Appraisal Institute This ‘requiremenet’ I believe is more of a ‘guideline’ — the market should decide and the appraiser should interpret

    • Thank you for the input!
      We do recognize that in the appraisal world these rules are considered “guidelines” and you may interpret it differently from time to time.
      Our reason for using the Fannie Mae guidelines has to do with NABPOP and their use of this rule in their BPO Standards and Guidelines. These rules have allowed BPOs to be legalized in the State of Mississippi; one caveat of the new MS law is that the NABPOP Standards and Guidelines must be followed.
      In order to maintain consistency in our products, we must follow these guidelines regardless of all other factors. Again, filling the form out this way should not impact anything else, this is meant to be only a standard way of filling in the subject characteristic data.

  3. AMEN! I do BPOs. Hundreds of them. Ive been driven crazy by lender requirements to discount ‘below grade’ sq ft. In the Portland area most homes of age have fully finished ‘basements’. (I hate to use the word basement) Many are split level and daylight basement that are EXACTLY the same as fully finished above grade 2 story except they have been partially built into a hillside, or perhaps down one level from the street view due to declining lot elevation, etc. Its ludicrous to comp a 2400 gla house as a 1200 when all the surrounding homes are 2400 split levels or daylights.

  4. I really don’t see this as a big issue and I agree completely with the current Fannie Mae guidelines. It is all relative to the neighborhood market. I can assure you, in our markets, a 2,400 sf split-level foyer does NOT have the same market value as a 2,400sf ranch. Do we use split-levels as comps, well, sure we do, if those properties are part of the best available competing sales within the neighborhood market. Are they comparable to a ranch, well sure they are. Typically a 2,400sf split-level in our markets will have 1,800sf AG and 600sf below grade or possibly 1600sf ag and 800sf BG. When we grid out those sales we report the actual square footage above and below grade including the actual room count, bath count, etc, above and below grade. We make the market derived adjustments for AG and then we apply the market derived adjustments for BG. If the result of those adjustments exceed any of the F-Mae 10/15/25% guidelines, then we simply comment on the reason, as in, “This sale has been adjusted beyond the recommended 15% net guidelines primarily due to variances in above and below grade living areas.”

    The fact is, typically our adjustments still fall within the 10/15/25% guidlines when comparaing split-levels to a ranch. We just don’t give the split-level as much weight in the final opinion of value.

    Remember, these are guidelines/recommendations and not LAWS, and the sole purpose is to help guide the appraiser in selecting the best comparable sales available within the neighborhood market. Given that, just because breaking down the GLA results in line item, net, and/or gross adjustments to exceed the guidelines does not imply that the comparable sale chosen is not a good comp. Just need to document why so the reader of the report has a clear concept of your Market analysis.

  5. Susan M. Louisignau SRA

    The way FNMA views GLA is ridiculous. I cover mainly a ski resort area in Vt. In this area the typical house has a walkout basement usually three sides above ground. It’s not unusual to have the kitchen/living area on the lower level. It’s finished to first floor quality. The comps will be the same. The market recognizes this as living area…… I have used it as SF and all of the comps will be the same in that all the levels are considered in the GLA.—— I explain that the market recognizes this as GLA and that the comps. are all the same. Most of the time it has been accepted. Just another case where FNMA tells us how to do our job and fails understand the purpose. I’ve been at this over 25 yrs. It’s just ridiculous. It seems to me that if the market supports it then the appraiser is justified in determining the GLA. End of story!

  6. Ive been in the business 32 years and have BPO’d over 2,000 homes in just the last 2 years. Of all the rules and regs concerning real estate at al, the ‘below grade’ rule is the most ridiculous one. It borders on insanity. I can see that comping a ranch against multi levels , as you describe in the first part of your post, is not a good match but lets simply consider two or three level homes here—there are more multi level homes in Portland than ranch style. Many of them are full real living space ‘basement’ or below grade bottom levels. I do not like the word ‘basement’ except to describe a traditional sub floor space not meant for living GLA. Of the multi levels here, the majority are either ‘daylight ranch’ or true two story homes that have one or two walls below grade to some degree. Usually from the front street they look like single levels but the lot slopes down to the back and/or sides. These are TRUE two level homes and if we use the above grade rue, we lose up to 50% of the true GLA. If the house is 1,000 and 1,000 for 2,000 GLA, and we comp it to 1,000 gla houses, we probably wont even end up in the subjects area.Ludicrous!

    I have to continually fight over this with most BPO companies.This is a rule that should be brought into the 21st century and deleted or changed. In fact, It doesnt matter what century it is, we humans must use common sense and there is no sense to this below grade rule.

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