Standards are in everything we do – from our job duties, to the cars we drive, and into how our homes are built. Appraisers all follow the same USPAP compliance standards when appraising a home, but sometimes these standards aren’t always so black and white – there can be ten different ways that one appraiser does things while another may only do one. What happens when these standards change? We sat down with Bryan Reynolds, an AQB Certified USPAP Instructor and on the ANSI 2020 Consensus Committee, for his take on the new ANSI Square Footage Standard and how appraisers can have their voices heard on what this change means.
Buzz: Can we please have your background in the appraisal industry?
Bryan: I am a practicing appraiser, and I have been since right before licensing occurred. I am Certified General Appraiser in Kentucky and Tennessee. I’m an author, but I think for the most part I’m a USPAP Instructor. I host a free podcast titled, “The Appraisal Update Podcast” as well as host a free monthly webinar called, “The Appraisal Report Webinar,” typically the fourth Thursday of every month. Occasionally we have some special edition webinars when there’s something hot going on in our industry that we want to get the word out on. I own the company called Bryan S. Reynolds & Associates which is a multiservice company – we do consulting and appraising. I also have another company, Fine Point Valuations, which is an appraisal company in Nashville. I’m a partner for the online educational provider company, Appraiser eLearning and I also currently serve as the Vice President of the National Association of Appraisers.
Buzz: Who is ANSI?
Bryan: ANSI stands for the American National Standards Institute. In particular with what we’re discussing today, they have a guide called the ANSI Z765-2003 (r2013). This is a recognized standard for square footage method for calculating and the current edition is of 2013.
I am also on the 2020 Consensus Committee for ANSI and I want to preface my conversation with you today by stating that I am coming to you as an appraiser, an educator, and a USPAP instructor – somebody that is in the appraisal profession, not someone who is a committee member for the 2020 update.
Buzz: What is ANSIs relation to appraisers and their standards?
Bryan: For most states, there’s nothing that requires the practicing appraiser to adhere to any specific standard of practice when it comes to measuring a house. That means, if I hire you to come appraise my house, you might measure it as 2500 s.f., but your competitor may come up with an entirely different size. There should be a level of consistency throughout the information – the results should be the same or at least very similar. Some states, like Kentucky for instance, requires appraisers to measure to ANSI standards – USPAP does not have that requirement.
It’s amazing when I ask appraisers around the country, “where do you start your tape measure when you’re measuring a second level with a sloped ceiling?” I hear a very wide variety of answers such as, “I start where my shoulder (or head, or hip) hits the slope,” “outside divided by two,” “baseboard to baseboard,” and my favorite of all time, “It starts when I walk up to the sloped ceiling and where my head hits the slope, I take a step back, and that’s where I start the measurement.” How far of a step do you take back? Because if that’s the case, send over your shortest appraiser! I think there are many people in the industry, both users of appraisal services, as well as practitioners that would agree that there is a need to have some sort of standard when we come to the proper technique of properly measuring a house.
If you go to homeinnovation.com/Z765, it gives you information in regards to the proposal and a draft standard of what it would look like if it were to be adopted right now. The second item you can click on for this website is “Public Proposal Report (PPR).” It gives you insight on what the proposed changes were and what the current status is. There were 26 proposed changes, and then two were added by the committees, so 28 total proposed changes for the new edition of ANSI. Most of those were disapproved, but presently there are seven that have been approved. Five of these have been modified, and the two by the committee were approved. We have a variety of changes seen and they’re referenced here as log.
Buzz: What upcoming proposed changes are you looking forward to most seeing?
Bryan: The first one is Log number two and it’s “ANSI defines living area as ‘suitable for year-round use’” and the change they’re looking at is adding some language on the location. I believe the thought process on that is that there are some areas where a they may not need a heat source for it to be livable year-round. Maybe a house in Hawaii for example.
There’s another change that I believe is a good change, not that I’m opposed to a majority of these, and it’s regarding floor coverings (Log 25). In the world of HGTV now, people are watching and willing to accept new things. One of those new things that are pretty common is the use of concrete as a finished floor rather than it being covered. They’ve removed language here that says “or painted” because that could potentially be misconstrued as a finished floor covering.
Buzz: What upcoming proposed changes are you not looking forward to seeing?
Bryan: The biggest change that has my concern is the change they have on Log 11. Number 11 is talking about sloped ceilings. The confusion is this: if you were asked to measure a sloped ceiling of a second level in a 1.5 level home, where would you begin your tape measure? The standard gives some guidance, but it also allows for more confusion such as including the hypothetical thickness of the wall. Some say they add in the thickness of the wall, but a majority do not include it. The hope is to get some clarity on this, but presently, it states to measure both ends at the 5 ft mark, but only measure one sides thickness of the wall. I think this could be extremely confusing for the industry. I personally say that if we are including thickness, to include it to all levels and to be consistent in all sides.
We had 300 viewers watching our free webinar regarding this topic. Of those 300, 48 participated in our survey. The question was, “when you measure a second level, do you add the thickness of the outside wall?” We had 18 people say that they do. As appraisers, it’s our job to be the analysts. It’s our job to analyze, but sometimes, we overanalyze. If you look at the current standard, it does not say to add the thickness of the wall, but some do anyway because of the inferring of the rest of the language used. Let’s not overanalyze it and follow it with the instructions that are given to us.
Buzz: With the upcoming hearing on ANSI Square Footage Standard – how would this impact appraisers on an everyday level?
Bryan: If the committee adopts the proposed draft of ANSI, there’s going to be major impact on appraisers. First of all, there’s going to be an educational challenge for providers to let the appraisers know the new rules. At least to those of who follow ANSI standards.
Buzz: What are some examples of standards that are commonly missed?
Bryan: Many appraisers think they know the standards when maybe they don’t. Bay windows are a common misunderstanding – they measure to the wall and they add to the thickness of the wall. What appraisers aren’t realizing when they’re measuring from the inside, is that by measuring from the inside, they are already accounting for the thickness of the window. If you add thickness, you’re kind of double-dipping. A lot of appraisers know to start at the 5 ft mark on a sloped ceiling – many of them are not aware that at least half of that has to have a ceiling height of 7ft or more. Garages – where to measure to and where to start the measurements. What if we had to go through an unheated area to get to another finished area? Should that area be counted in gross living area? These are all areas where appraisers seem to struggle.
Buzz: What can appraisers do and where can appraisers go to have their voices heard?
Bryan: If appraisers want their voices heard, we have a free webinar once a month, brought to the public by Appraiser eLearning. These webinars talk about a variety of issues and allows for us to give back to the appraisal profession. I also have a podcast, The Appraisal Update, where appraisers can voice their opinions and concerns.
Go to www.homeinnovation.com/Z765 – from here you’ll see the new 2020 Draft Standards, the Public Proposal Report, and a submission form for public comments. This closes on March 23rd, so submit your comments as soon as possible. Whether you support what they’re doing or not – please be respectful and professional. They are trying to make something better – I don’t believe anyone has the intent to do anything maliciously. The more information and public commentary that they receive, the better they can reach a final decision.
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