Besides locational influences, a home’s physical size is perhaps the single biggest contributor to its value. As such, accurately capturing dimensions is essential to getting a credible appraisal. Unfortunately, securing accurate and consistent GLA has historically been very challenging, even in the longstanding traditional appraisal process.
While all appraisers are certainly skilled and capable at measuring and sketching, from appraiser to appraiser there is often variation in how they apply certain principles. For example, some appraisers treat the square footage of stairwells differently than others, even within the same geographic market, based upon the specific way in which they were trained to do so in the past. Some appraisers measure to the nearest foot, some to the nearest half-foot, some to the nearest inch. These are just a few examples.
For such a critical data point as GLA, significant variances currently exist in how square footage is collected. To quantify the level of inconsistency in the traditional appraisal process, we dug into almost 300 properties where Clear Capital fulfilled two different 1004/70 (URAR) appraisal reports on the same property, with two different appraisers within a short time period. Because there’s an element of human error in the traditional GLA process — as well as the inconsistent application of principles — the results show noticeable variances.
|Sample size of properties||285|
|Average GLA variance||3.9%|
|Percent of properties with significant GLA variance||4.9%|
|Standard deviation of variance||8.0%|
*Defined as a variance of 15 percent or greater
The most important takeaway: There is already significant inconsistency in the GLA calculations that the appraisal industry is producing today. The notion of “ground truth” is something we shouldn’t assume is perfectly captured in any human-directed process.
Fannie Mae recommends ANSI® Z765-2021 as a Method for Calculating Square Footage
Thankfully, Fannie Mae has just announced a new policy change that will help address this inconsistency. Effective April 1st, 2022, Fannie Mae recommends that all appraisals produced for them should utilize a floorplan and GLA calculation that align with the ANSI-Z765 standard.
Due to this change, Fannie Mae can be assured of receiving consistent and accurate data for an absolutely essential data element to their risk models. This is great news for the long-term safety and soundness of the US Housing Market.
The more challenging aspect of this ANSI switch is how we get an entire industry ecosystem – lenders, AMCs, appraisers, trainees, third-party inspectors, and more – to effectively migrate to ANSI. Despite being one of the easier measurement standards out there, it is still a fairly challenging standard to adhere to – with specific nuances related to ceiling height, below-grade spaces, stairs, and more. How will the industry comply?
Solutions: How To Align With ANSI-Z765 standard
One option is to take training courses to align your hand-drawn measuring and sketching process to ANSI. This will take many hours of time, cost you significant dollars, and ultimately still expose you to the risk of human error that is inherent to a manual, paper-driven process of hand-drawn sketching.
The second option is to use CubiCasa – the world’s only technology that enables anyone with a smartphone and almost no training to produce an accurate, ANSI-aligned floor plan from only a 5-minute smartphone scan. Our Digital GLA outputs clearly denote living area and non-living area in a visually intuitive way, have the ANSI-Z765 baked automatically into our Computer Vision models, and the process is so simple that even an untrained homeowner can do it effectively.
To evaluate how CubiCasa would compare to these standards set by traditional methods of calculating GLA, we had two different, untrained homeowners perform a CubiCasa scan on the same property. Let’s compare the preliminary results of this kind of testing:
|Two different appraisers hand-measuring the same property||Two different untrained homeowners scanning the same property with CubiCasa|
|Sample size of properties||285||43|
|Average GLA variance||3.9%||4.0%|
|Percent of properties with significant GLA variance||4.9%||0.0%|
|Standard deviation of variance||8.0%||3.5%|
*Defined as a variance of 15 percent or greater
As you can see from the table above, CubiCasa produces dramatically less inconsistency and variance in results than the traditional appraisal process, because ANSI is already baked into the models with consistency, and the human guess work and error is completely removed from the equation. The standard deviation of two different appraisers is more than double that of what we see with two different untrained homeowners using CubiCasa. Bear in mind that this is a test using untrained homeowners — the greatest degree of difficulty we could find!
Aligning with the new ANSI requirements is easy for anyone to do with CubiCasa’s Digital GLA.
How to create Appraisal Floor Plans with CubiCasa
- Create an account via the sign-up section
- Download CubiCasa app from App Store or Google Store
- Watch our quick video tutorial
- Start scanning according to best practices
- Submit your order & receive your ready floor plan + GLA calculation within 24h
Industry Update: New Fannie Mae Desktop Appraisal Standards
Fannie Mae announced on Jan 19, 2022, the forthcoming 1004 (Desktop) Appraisal, and the floor plan requirements.
Did you know that CubiCasa is the only technology that meets all the Desktop requirements and can be performed by ANYONE with a smartphone and no training?
GLA For Large And Complex Properties
Moreover, the CubiCasa solution will help you scan a complex property and get measurements for interior space in a hassle-free process. Regardless of weather conditions, you can create accurate GLA sketches and floor plans with our revolutionary floor plan app.
To learn more about CubiCasa’s Gross Living Area calculator app, book a demo with one of our representatives.