How To Measure A Finished Attic Area:The Fannie Mae 5' Rule (Fact or Myth)

By
Real Estate Appraiser with Michael S. Bolton,Inc.

I'm guessing that this is one of those "Myths" that has been passed around for many years, and it's one that I was taught. In case you're not familiar with the 5' rule, it relates to the way finished upper levels are measured. It states that there needs to be at least a minimum of 5' of ceiling height for the space to be counted as part of the gross living area (GLA). In the diagram above only the area that has a the ceiling height of 5 feet would be counted as living area.

What Does Fannie Mae Say About the 5 Foot Rule

Fannie Mae doesn't actually have any minimum height requirements (click link to read Fannie Mae's selling guide) for upper levels, or for that matter any level. This guideline originates from ANSI (American National Standards Institute), which in 1996 produced a set of standards in relation to how a residential house should be measured. We're kind of splitting hair's here, because most appraisers follow the ANSI standards in their appraisal business, and thus will use the 5' rule when appraising homes using Fannie Mae financing (but keep in mind it's not a Fannie Mae rule). Below is from Fannie Mae's selling guideline regarding using "GLA" as a method for comparison:

Why Is This Important To Know

First, being that there is no national standard within the real estate community regarding measuring a home, it would be great if everyone was on the same page. This would create better and more consistent data within the MLS system.

Second, being that there is no Fannie Mae guideline set in stone, it's important for appraiser's (and other real estate professionals) to know that you're allowed to deviate when calculating GLA. Fannie Mae is more concerned with consistency than the adherence of a particular guideline or rule.

Below is from Fannie Mae's selling guide:

When Might An Appraiser Have To Deviate

There are certain circumstances that an appraiser may have to deviate from the standard that they use when measuring a residential house. Fannie Mae (as indicated above) requires that appraiser's be consistent in their calculation of the GLA. There are certain design styles that lend themselves to different interpretations as to what is GLA:

  • Multi-Level homes when there is no clear indication of below and above grade area.
  • 1 1/2 Story home where the upper level of sales listed in the MLS are being calculated for all of the floor area.
  • Two-Story homes where the sales listed in the MLS are being calculated using the open space within second level area(s).

This can become very challenging when trying to estimate the GLA for MLS listings, because there is going to be some subjectivity involved when calculating the GLA for the both the property being appraised and as well for the comparable sales. However, by being more concerned about being consistent rather than the adherence to a "rule," you'll produce an analysis that is more reflective of the market. A detailed explanation within the appraisal report as to why and how the estimates were arrived at is required.

Until there is some national standard within the real estate community regarding measuring a house, it's important to help those involved in measuring homes for a living to understand the importance of adhering to a standard for measuring residential real estate.

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Dagny Eason 03/11/2012 01:16 AM
  2. Joni Bailey 03/11/2012 04:00 AM
  3. Martha Brown 03/11/2012 08:57 AM
Tags:
measuring a home
fannie mae 5 rule

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Rainmaker
2,265,005
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

You are so good at what you do. I never really understood how the square footage is truely broken down. That you for the lesson this morning.

Mar 05, 2012 09:20 PM #1
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Joni Bailey
101 Main St. Realty - Huntsville, TX
Your Huntsville / Lake Livingston Area REALTORĀ®
THANK YOU! We have lots of lake houses with these rooms. Now I know the proper way to measure them. You are so helpful!
Mar 05, 2012 09:45 PM #2
Rainmaker
5,416,647
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Excellent tips on how to measure attic space.

Have a great day, with your camera in hand.

Mar 05, 2012 11:23 PM #3
Rainmaker
601,535
Lindsey Hasford
Edina Realty - Elk River, MN
Bringing you home...

I have heard some say that you can't count the sloped ceiling space, but never knew why. This is really fascinating to me. Thanks for sharing this Michael!

 

Mar 06, 2012 12:08 AM #4
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John McCormack, CRS
Albuquerque Homes Realty - Albuquerque, NM
Honesty, Integrity, Results, Experienced. HIRE Me!

Great job on breaking it down for me.  I had never heard of the 5 ft rule before.  We don't have many finished attics in my part of the desert.  Suggested.

Mar 06, 2012 01:04 AM #5
Rainmaker
375,566
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

Man, nothing's easy. You've given a very thorough, well-documented explanation.  Thanks. 

Santa Clara county doesn't have finished attics but nearby San Francisco, does.

I don't see how a finished attic can be included in GLA unless there are permits.  First, it wasn't engineered to carry the load that a normal living space floor carries.  I wouldn't put a water bed up there.  Second, it may cause the total GLA to exceed the amount of living space allowed by that city for that lot size.

Mar 06, 2012 03:37 AM #6
Rainer
147,717
Michael S. Bolton
Michael S. Bolton,Inc. - Zimmerman, MN
MN Appraiser

Thanks Joe, I really appreciate that.

Hi Joni, I'm glad you found it useful.

Thanks Roy!

You're welcome Lindsey!

Hey John, My guess in the desert the last thing you want is to go any higher towards the sun. :)

Lloyd~My experience is that most second levels can handle the load for finishing, however, I agree with the water bed issue. I'm still going to address your concerns about the permit issue in another blog post, because it's important.

I've never run into a situation where a house has too much GLA per the city code, most of the time it's the other way around. CA must have some different codes as far as living space goes. I always take the position that when I'm inspecting a home that I'm there to protect the interest of the client, and the safety of the occupants. I have no idea if proper permits were pulled for: decks, patios, porches, garage additions, finished basements, finished attics, etc. I just look for shoddy workmanship or things that pose a danger. However, if I'm aware of an illegal use, then that's an entirely different situation that would have to be addressed separately.

Believe it or not, by answering these types of questions makes me a better appraiser, so Thank You!

 

Have an AWESOME day!

Mar 06, 2012 09:25 AM #7
Rainer
319,213
Peg Barcelo
Fluff My House! Home Staging Inc. 250.486.6369 - Summerland, BC
The FlufftasticStager from Summerland, BC

Michael, this is such great information! Thanx for the explanation! Knowledge is power!

Mar 06, 2012 12:53 PM #8
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Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Hey Michael!  I included this post in Last Week's Favorites.  Have a great week.

Mar 11, 2012 12:24 AM #9
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Dagny Eason
Dagny's Real Estate - Wilton, CT
Fairfield County CT, CDPE Homes For Sale and Condo

Michael - so pefect!    I knew it was around 5 feet, but didn't remember it exactly - reblogging so my buyers learn something new today!

Mar 11, 2012 01:04 AM #10
Rainmaker
1,181,060
Adrian Willanger
206 909-7536 AdrianWillanger-broker.com - Seattle, WA
Profit from my two decades of experience

Michael, extremely good information, in Seattle we lots of homes with basements and converted attic spaces so this makes tons of sense to me. 

Mar 11, 2012 01:36 AM #11
Rainer
147,717
Michael S. Bolton
Michael S. Bolton,Inc. - Zimmerman, MN
MN Appraiser

You're welcome Peg!

Thanks again Pat! Very much appreciated!

Dagny~I'm glad you found it useful! Thanks for the re-blog!

Hi Adrian, Thanks for stopping by.

 

Have an AWESOME day!

Mar 11, 2012 04:25 AM #12
Rainmaker
810,011
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Michael:

Great information.  I am bookmarking your post for future use.  I didn't know what the criteria for attics was so this post is very helpful.  Thanks.

Mar 11, 2012 06:56 AM #13
Rainmaker
669,428
Martha Brown
Long & Foster Real Estate, Inc., Annapolis MD 21403 - Annapolis, MD
Your Homes Around Annapolis Agent

This is great information. I am meeting two appraisers this week and I will ask if they do the 5 foot rule because one home has a 2nd floor with angled ceilings. It seems a shame though as the space not counted is finished useable space but....

BTW the way I came from Pat's blog and so glad I did.!! Not many appraisers here or at least I havent found any so will be good to follow you. Subscribing now. :0)

Mar 11, 2012 08:54 AM #14
Rainmaker
588,465
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Hi Michael - This is really informative.  We don't have an attic room in our home, but we do have a walk-out finished basement - one of the only ones in our area.  Consequently, some appraisers count the square footage and some don't - I guess because it's not all above grade.  Our purchase loan and our later refinance loan both required appraisals and they show very different square footage for our home.

Mar 12, 2012 02:14 PM #16
Rainer
147,717
Michael S. Bolton
Michael S. Bolton,Inc. - Zimmerman, MN
MN Appraiser

Hi Evelyn, I'm glad you found it useful.

Thanks Martha, Thanks for subscribing, very much appreciated!

Hi Erica, Basement square feet is a hole different ballgame that finished upper level space, I'm working on a blog about that.

Susan, It's always frustrating when there's inconsistencies, but without seeing your home it's hard to tell why there was more than way used to measure your home.

Hi Valerie~The more people get educated on this, especially appraisers, the less confusion there will be regarding appraisals.

Make it an AWESOME day!

Mar 13, 2012 11:44 AM #18
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