Can a finished attic be included in the appraisal of a home?

I was asked a great question by an agent this week that I thought I would share with you. Before we get into that though I would like to let you know that I am available to answer any appraisal related questions you may have. I can be called, emailed, or you can even text me. If I don’t know the answer right away I will find it and get back with you. I might even write a blog post about it, because I know that if one person has a question then others may too.

So the question that the agent asked was this, “If an older home has permanent stairs to attic space that’s been finished with good headroom that includes a bedroom/closet/bathroom, do you include the square footage in your appraisal of the home”? The criteria for what can and cannot be included in the finished area total is set forth by the American National Standards Institute through what is known as the ANSI Standard. There are several criteria that must be met in order for this area to be included. The first criteria is that at least half of the finished square footage must be 7 feet where the ceiling slopes and those areas less than 5 feet are not counted in the finished area. Here’s a picture to help you understand it.attic floor height requirement

These are the rules for how the area is calculated, however the quality of finish is also studied. The quality of finish should be similar to the rest of the house so that the area is functionally usable in addition to being heated and cooled. Homeowners sometimes like to do the work themselves in order to save money and if they have the skills to pull this off so that the addition is similar to the rest of the home this works out fine, however if they lack the knowledge it could have a negative impact on the property and the additional area may not get counted as much, if it is counted at all.

The last thing I would like to discuss is the topic of permitting. Appraisers are not required to check whether an addition is legally permitted unless the client specifically ask’s for it, however we are required to include pictures of every room. If there are signs in these pictures that the addition has inferior quality of construction or workmanship then they may ask us to verify if it was permitted. If it was not permitted this could result in a loan not being made, so it is important that proper permits be obtained. Have you had any experience with a similar situation? What was it and how did it turn out? Would you have any other questions I might be able to answer?

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

Comments

  1. Hello Tom,
    I read your blog about attic space being included in the square footage if at least half is 7ft. high? Would it be possible to get square footage credit for the area that is 7ft. For example that attic space is 400 sq. ft. and only 180 sq. ft. of it is 7ft. high? Could the 180 sq. ft. be included in the square footage.
    The home has access to the finished attic space from the master bathroom not from a hallway or stairway. Does that make a difference as well?

    • Darlene, it sounds like it would pass the test so to speak. Since it has not access from a hallway it could probably still be included and counted as a sitting area.

  2. Hi, does anyone have guidance on the impact to accessing a finished attic through a 2nd floor bedroom? We are considering buying a house that has a very small third bedroom. The third bedroom has a closet and then another door that leads to the attic stairway. While it’s not an issue for us as we would likely use this third bedroom for storage or work out room we are concerned about resale. I know it’s not uncommon to have a pulldown ladder access to the attic from a bedroom but a stairway seems odd. But maybe this is more typical than I realize and isn’t something to be too concerned about. Most of the homes in the neighborhood were built between the 1920s and 1940s. Any thoughts or guidance would be appreciated. Thanks!

    • It confused me a little when you said that the third bedroom has a closet and then another door that leads to the attic stairway. Not sure if that particular area is finished or not, or if it is an unfinished area that leads to a finished area. If you have to pass through unfinished area to get to finished area it cannot be included in the total gross living area of the house.

  3. Hello. We are considering purchasing a home with 1200 square foot finished attic space. A contractor built this mome for himself 15 years ago. I don’t think a permit was pulled for it. The extra square footage isn’t included in taxable living space. Taxes are so high in this area that we live in. We don’t want this to count as living space when we buy it. The realtor told us that it doesn’t have to be included on taxes because there isn’t a bathroom upstairs. Could this be true? We couldn’t afford this house if we were taxed on it. We don’t want to get zinged for doing something wrong either. What are your thoughts?

    • Hey Carrie, thanks for the question. I don’t know exactly where you live so your tax assessor may do things a little differently than mine does. An area does not have to have a bathroom to be counted as living area, however the type of finish, access, and ceiling height will play a bigger role in whether it could or should be included. The appraiser will be able to make the determination as to whether it can be included as gross living area. If the area is considered living area and you bought it I don’t believe the tax assessor would know about the extra square footage because they would not see a copy of the appraisal. The only way they would know about extra living area is if a building permit was obtained or the assessor spoke with you or the owner or viewed the interior of the home. If you have any questions you may want to contact a local appraiser to ask them the question you asked me since they will know the local laws. Hope this helps.

      • I don’t think it’s fool proof to assume that since the town does not have this info, they will never get it… They sure can!. In my case, my county did a town wide home reassessment for tax purposes and an independent appraisal company was hired to reassess ALL the homes. They send out an inspector to your our home to bring all information about your home up to date. We needed to let them in, but if they couldn’t get in, they used old information to recalculate your value to bring it up to current market value. I had a neighbor who tried to slip away, but the independent company the town hired was very aggressive about it and waiting at the street for the owner!

        Part 2 of my story – Please understand the difference between a unfinished attic, finished attic, and half story. This is a HUGE difference that I learned the hard way! I have an unfinished space above my garage that I always thought was an attic. It does have a door from my daughter’s bedroom that we use as storage. My assessment was much much higher in the access of 40K compared to the same model home on my street. I was lucky enough that our town’s property assessor was patient enough to hear all my descriptions of this room and corrected this area from “unfinished half story” to “unfinished attic”. Just by correctly categorizing this space, the new assessed price was lowered by 40K. Unfortunately, the independent company the town hired did not give me the time of day to explain to me the difference and told me to go to the appeal hearing if we didn’t agree with their assessment. I was lucky that I was spared he hearing because I was very persistent on the township level. I hope that helps!

        The diagram that Tom has is greatly helpful to determine attic vs half story/floor but would be even better if we can see side by side how an attic is determined.

        Given, the county does not do this often.. the last time they did this was over a decade ago, but nevertheless it does happen.

        Information is power and if I only knew the difference, I would have had an easier time getting our PRC corrected sooner!

        • Thanks for sharing your story N.S. I agree that information is power. To make sure that our property taxes are correct, and that we are not overpaying, we need to make sure the county has the correct information. Classifying areas and making sure the square footages are correct is a good starting point. Glad to hear you had a good outcome!

  4. Hey Tom,
    question for you. I have a finished attic, stairs, walk in closet, full bath and bedroom. However the ceiling height at its highest point is only 6.6ft. (sad me). when I had the appraisal done, the appraiser noted that due to the ceiling height, the area would be valued separately and at a lower rate. Do you know what that rate might have been? Is there a standard to that type of thing? I’m trying to decide if raising the ceiling height is worth getting that extra bit of value.
    Thanks!

    • Kelly, thanks for the question. There is no rule of thumb or formula for calculating the value but it will depend on several factors. The picture I included in the article shows the requirements for the area to be included. It will also depend on what buyers in your area are willing to pay for the attic room, and this can only be determined by doing the appraisal. I will say that the type of access will also influence the value as well as the degree of finish. You might want to ask the appraiser how much value they assigned to the finished attic since they are familiar with it.

      • Hi Tom,

        Here’s a related question – does ANSI absolutely require that the finished attic have heat? Our attic is finished but is not separately heated and we’ve never had an issue with it being cold. In fact, it’s one of the warmest rooms in the house and we live in the Northeast, where it has been bitterly cold.
        Thanks!

        • Hey Jared, thanks for the question. I would think that as long as it is comfortable and is acceptable to the general market then it should be fine. Is this area also adequately cooled during the summer? If sufficient heating and cooling is provided by way of a hallway or stairway is should be acceptable, given that the quality of construction is similar to the rest of the home.

          • Yes, it is adequately cooled in the summer via a window air conditioner. The house does not central AC (yet) so this is the same cooling employed for the rest of the house.

          • Jared, it sounds like it should meet ANSI requirements if the quality level is similar to the rest of the house, and is adequately heated and cooled with acceptable sources.

  5. Great post, Tom. You nailed this one. I really like the image too because it helps the reader understand exactly what you wrote.

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