Likewise, it s important for every appraiser to understand why their sketches can vary from other appraisers, even when both are done by the book.
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1 Used with permission from Working RE magazine, published by providing E&O insurance for appraisers, inspectors and other real estate professionals. (888) Editor s Note: Appraiser Pat Butler shares little-known but common measuring mistakes, reveals why two competent appraisers might produce varying sketch measurements and provides the best ways to reconcile the differences. Everything You Don t Know about Measuring (Really) By Patrick J. Butler An important part of the appraisal review process performed by relocation companies and others is ensuring that both appraisers submitting reports have calculated a mostly similar amount of gross living area for the subject property. Likewise, it s important for every appraiser to understand why their sketches can vary from other appraisers, even when both are done by the book. A reviewer might need to determine whether an appraiser made a measuring mistake or whether differences in each sketch are simply a result of different measuring techniques. Insurance underwriters also reveal that measuring mistakes are one of the most common reasons appraisers get sued. This article will introduce you to some inherent problems in the measuring process, allowing you to complete (or review) property sketches with an understanding of what problems might occur when measuring a particular house. Because many organizations require a fixed limit on how close two appraiser s size calculations must be- 100 square feet for example, accurately measuring properties becomes exceedingly important. After reading this article, you may decide a relative amount, such as a five percent difference, is a better strategy. To illustrate, a 100 square foot difference on a 2,000 square foot home (five percent) makes sense but what about a 100 square foot difference on a 5,600 square foot home? Significance of Small Mistakes Some of the measuring situations mentioned here may result in an appraiser being off on a measurement by only a few inches and this does not seem like much. However, remember that a house sketch might be comprised of dozens of small line segments, and those one- or two-inch mistakes add up if they are all in one direction. Also, the gross living area of a house is comprised of area calculations in which width measurements are multiplied by depth measurements multiplying the effect of any mistakes. Finally, there are some appraisers who insist on rounding their measurements to the nearest six inches or even a foot. A one-inch error can therefore result in a six-inch mistake if it causes the appraiser to round up or down in the wrong direction. Now multiply that six-inch mistake by the
2 50-foot length of a sample house and suddenly that one-inch mistake just affected the living area by 25 square feet. An appraiser who rounds to the nearest foot just made a 50-square-foot mistake by being off on only one measurement out of dozens that are likely to be made. Pulling your Tape Tightly Fiberglass measuring tapes are probably the most common measuring tool in an appraiser s arsenal. Fiberglass models are preferable to steel tape models because they are less apt to scratch something when pulled around inside a house. Fiberglass has a tendency to stretch more easily than steel tape. Two people can get a different measurement depending on how tightly they pull the tape. The stretch is usually less than an inch but that can be a critical amount for an appraiser who rounds his or her measurements to the nearest six-inch interval. Does one of your sketches have measurements that are consistently shorter than the measurements of another appraisal? It could simply be a difference in how tightly one appraiser is pulling his or her tape. If this sort of difference in measuring has caused the sketches to differ quite a bit in their living areas, it might be necessary to have one of the appraisers re-check his or her measurements. That might actually require another trip to the subject property.you probably can get a good idea of which appraiser did a better job measuring based on your interviews with them. That will help you decide who needs to be encouraged to double-check his or her work. Rolling Wheel Some appraisers measure using a rolling wheel. These are commonly available with either small or large wheel diameters. A smaller-wheeled model is better for measuring the exterior of a house because it can be rolled in closer to an inside corner. Some of the larger-wheeled models have a 12-inch diameter wheel and can be rolled only within six or seven inches of an inside corner. A larger-wheeled model is more useful for taking long-distance site measurements over rough terrain, where the larger wheel is less apt to slip as it is rolling. When measuring a wall with an inside corner, the appraiser needs some sort of reference point on the wheel itself to know when one revolution has been completed. The appraiser needs to carefully line up the reference line over the corner of the house and make sure he or she considers where the reference mark ends after the wheel has traveled the length of the wall. This will allow the appraiser to measure the final distance between the reference mark and the inside corner. Overall, rolling wheel measuring tools are among the least accurate devices available because the diameter of the wheel reduces the ability to measure into tight corners. Another error made with rolling wheels is when an appraiser rolls the device along the sloping surface of the ground rather than against the house. In this instance, the appraiser actually is measuring the slope line of the ground, which will be a longer distance compared with the actual width of the house. Carefully view the exterior photographs of the subject property to see if there are any sloping areas that might have contributed to measuring errors. If you are comparing two appraisals with differing amounts of living area, it might be a good idea to ask your appraisers what types of measuring devices they used. The wheel-roller appraiser might want to double-check his or her measurements using a fiberglass tape.
3 Lasers Laser and ultrasonic tape measuring devices are becoming the measuring tools of choice for the modern appraiser. Ultrasonic measuring devices are less expensive than laser tools and are becoming more commonly used by appraisers. Ultrasonic devices rely on sound wave transmissions through the air and measurements can be affected by changes in temperature. Thus, two appraisers can acquire different measurements depending on the temperature of the room they are in. The targeting beam of most ultrasonic devices can be large in diameter that can result in inaccurate measurements if it is unclear where the invisible beam hit. Most of the ultrasonic devices are designed for the mass consumer market and are likely to have quality issues. Many appraisers and real estate agents who use these devices will tell you that they seem to become less accurate over time. While expensive, laser measuring devices are the tool of choice for any appraiser desiring the utmost accuracy. One popular model used by appraisers is the Disto by Leica. These devices were used in the surveying profession long before they became popular with appraisers. As a result, most laser devices have a rugged design and generally are a higher quality than ultrasonic devices. Most laser measuring tools will project a red laser dot onto the target so the appraiser knows exactly where he or she is measuring. Some even have built-in scopes so an appraiser can visually line up the red laser dot over a long distance. If an appraiser is properly using one of these laser tools to measure a house, you generally can expect more accurate measurements compared with the other types of devices. If you are trying to reconcile two sketches with different measurements, it would be a good idea to ask each appraiser what tools they used to measure the house. Trouble Spots Some characteristics of a house can cause measuring problems. Appraisers are taught to measure the outside dimensions of a house that is where the term gross comes from in gross living
4 area. The exterior dimensions assist the appraiser in developing the cost approach when it is needed. Of course, the cost approach is not required for a Worldwide ERC appraisal but appraisers still use the same measuring techniques. Problems start to occur when the outside walls of a house have varying thicknesses of materials. A common example is when a portion of the house has face brick installed on only the lower portion of the wall. One appraiser may include the face brick when measuring while another may not. Unfortunately, there are no standards indicating the correct way to measure a wall with differing thicknesses. If you compare two sketches and see that one appraiser has a wall length that is three to four inches longer than the other appraiser, look at the photo of the house if you see a wall partially covered in face brick, then you will know the source of the difference between the two sketches. Decorative stonework creates the same type of problem: large stones have differing thicknesses that can easily cause two appraisers to be off from each other by four to six inches on one wall. One of the best solutions to the differing wall thickness problem is for the appraiser to keep track of how he or she has been accounting for differing thicknesses and change measuring methods on opposing walls so that the overall thickness of a particular wall segment represents an average thickness. Lap siding can create another type of measuring problem. Lap siding is the horizontal siding on a house where each subsequent board partially overlaps the one below it. If you look head-on at the corners of a house with lap siding, they usually are tapered that is, the top edge of one piece of siding is narrower than its bottom edge. Two appraisers measuring the same end of lap siding can obtain different measurements depending on where they attach their tape measures. It is usually a good idea to attach the tape measure to the middle section of the siding to obtain an overall average reading. The corners of a house present another problem. Vinyl or aluminum siding have corner pieces installed at every outside corner of the house; wood siding also can have similar corner pieces installed. Those corner pieces usually add an inch or two to the length of the corresponding wall section.
5 Some appraisers will include the thickness of the corner pieces while others will ignore it. Sometimes those corner pieces will be installed rather loosely it is imperative the appraiser pull the tape measure especially tight so the corner piece is pulled tightly against the house. Look carefully at the house photos to see if there are corner pieces installed or if the corners of the house just have butt joints. Not so Square A new appraiser quickly realizes that many houses are not built square this becomes most apparent when the appraiser starts to draw the sketch on his or her computer. Suddenly, the sketch does not close completely, despite the appraiser typing in all the correct measurements. Few appraisers will draw a sketch that shows the reality of a crooked house most appraisers will fudge the sketch so the entire house comes out square. That has become an acceptable solution to the problem most appraisers square up their sketches. Nonetheless, the practice does result in otherwise absolute measurements getting a little distorted. Despite the best intentions during the measuring process, accuracy gets lowered as a result of the appraiser squaring things up. Sometimes an appraiser is simply unable to directly measure part of the exterior of a house. The second story of a house can be troublesome if there are no good reference points to line up with on the first story of the house. That can happen if there is a room or closet on the second level of a house that is partially projected out over the first story of the house. Some rooms may project out over the garage but not have a window on that particular wall, leaving no visual reference on the exterior of the house. In that instance, the appraiser might have to take interior measurements of the house and convert those into exterior measurements by adding the wall thickness to the interior measurements. Walls commonly range from five to eight inches thick. A problem occurs with this approach when it is difficult to measure the wall thickness because of an uneven surface, such as a stone veneer. Wall Thickness Different appraisers are bound to get varying measurements for the average thickness of the exterior wall of the house. Many high-end houses will have features such as walk-in closets or bathrooms that blend into the outside elevation of the house. Pay particular attention to these problem areas on a sketch and you likely will see some variation in measurements between different appraisers. Gross Living Area (GLA) is the calculation of the total living area in the residence, expressed in square footage. This is calculated using exterior measurements (except condominiums and cooperatives), and is generally limited to the habitable above-grade living area only. Basement and attic areas (finished and unfinished) are not included in GLA, room and bath counts. However, they may make a valuable and significant contribution to the property value, and should be calculated and shown separately in the report. - Worldwide ERC Guideline #5 from the Relocation Appraisal Guide
6 A decision has to be made when an appraiser starts to account for wall thicknesses: does the appraiser only consider the exterior wall thickness or should he or she also consider interior wall thicknesses when drawing an area of a house? Let us take an open two-story foyer, for instance. The appraiser might take an interior depth measurement toward the front of the house and then add the exterior wall thickness. Should the appraiser also add any sort of wall thickness to the width of the open foyer where it does not run against an outside wall? There is no standard to apply when answering that question, so you might see two sketches of the same foyer with different depths and widths. The issue of how the wall thickness is handled lends itself to measuring inconsistencies and sketching difficulties. All you can do as a reviewer is make sure that both appraisers are within a foot difference of each other. Most appraisal sketching programs do not give appraisers much control over wall thicknesses. Many simply draw a thin line and it is not apparent if the line represents the inside or outside of a wall section. The appraiser lines up different levels of the house by drawing lines on top of each other but it is not exactly clear whether the interior or exterior of the wall is being lined up. That is in contrast to computer-aided design (CAD) programs that do take the wall thicknesses into consideration and allow the user to precisely line up the appropriate areas. An appraiser wanting the utmost accuracy with his or her sketch might be hampered by his or her sketching software. The Unit An appraiser has to make a decision on what unit of measurement is going to be used in measuring a house. Is a common fractional measurement system (sixteenths of an inch) going to be used or are all measurements going to be taken in tenths of an inch? Most sketching programs
7 allow data entry in either method but rounding errors will occur if the appraiser enters dimensions in a unit other than what is being used in the sketch program. For example, it is obvious that six inches equals exactly half a foot. But what happens when an appraiser needs to draw an eight-inch line on the sketch? An eight-inch line is about feet, but most sketch programs do not retain that many significant digits. So eight inches might get converted into 0.7 feet. The measurement has been slightly changed as a result of the conversion process. Conventional tape measures are available in tenths and most electronic measuring devices also allow for changing the units. The appraiser should be recording measurements in the same unit that is going to be used when sketching. There are quite a few appraisers doing sketches to the tenth of an inch who are using conventional tape measures that only allow fractional measurements. Standards ANSI Z is the American National Standard Institute (ANSI) standard that covers the measuring process and is available from the National Association of Home Builders (NAHB) Research Center at Unfortunately, it does not address the majority of issues mentioned in this article. It does provide a bit of clarification on how to properly measure an open area such as a two-story foyer and when to include small areas such as walk-in closets. It requires that any openings to the floor below not be included as finished square footage. However, the appraiser can include the area of the stairs themselves. You never can be sure if any two appraisers are following the same standard because adherence to the ANSI standard is voluntary. However, the Worldwide ERC Relocation Appraisal Guide contains its own definition of gross living area that appraisers must adhere to for providing standardization. It is very similar to the ANSI standard in that it requires exterior measurements of the above-grade habitable areas. Basement and attic areas are not included in the calculation of gross living area. However, those areas might contribute to value and can be given value elsewhere in the appraisal report. Open areas of a house, such as two-story foyers, are not considered habitable areas, so they would not be included as part of the gross living area calculations. Appraisal Effect The most obvious effect of differing measurements on an appraisal is that any adjustments for gross living area might differ among appraisers. That is why some appraisers do not even make an adjustment on a comparable unless it differs by at least 100 square feet. An appraiser who adjusts for very small differences in gross living area should be questioned as to his or her technique. Differences in measuring also can affect comparable properties. Appraisers need to do their own reconciling when looking at comparable property data. For example, an appraiser might use comparable properties of the exact same model as the subject property, while the assessor might report slightly different measurements and calculations.
8 The appraiser should obtain the assessor s actual data cards for the comparable properties and check for him- or herself where problems occur. The appraiser can report the assessor s figures that are different but choose to make no adjustments if he or she is certain it is the exact same house. The appraiser should comment in the report that the houses are the same despite having differing amounts of gross living area and that is why no adjustments are required. The attention paid to some of the subtleties of measuring techniques reported in this article might seem a bit over the top. But every appraiser measuring a house should be considering these factors when encountering a difficult measuring situation. A property sketch that appears simple on the surface might be the result of an appraiser making lots of small decisions on which way to proceed. Summary Clearly, there are many measuring difficulties for which the appraisal profession has no agreedon solutions. When reviewing, it is important for you to interview your appraisers to see how they handled particular situations. Make sure they use the highest quality measuring devices appropriate for the job. Ask whether they considered the wall thickness of the house for any of the measurements. Ask whether they obtained data cards from the assessor to double-check the assessor s work for comparable properties. Find out if they used supplemental data such as builder s marketing sketches to further verify some of their data. Look at the photos of the subject property when reviewing the sketches and talking to your appraisers see if the dimensions on the sketch have obviously been rounded to a large interval such as six inches. The answers to those questions will help you determine if your appraisers made obvious measuring mistakes or just used different techniques. If there are no obvious measuring or sketching mistakes, then both of the sketches should be reasonably close in their gross living area calculations. There are no standards as to how far apart two different sketches may be however, I would recommend that you be concerned if two appraisals differ by more than five percent in gross living area. Reprinted with permission of Worldwide ERC, from the May 2006 issue of MOBILITY. About the Author Patrick J. Butler is with Appraisal Services, Inc., Montgomery, IL. He can be reached at (630) or pat@appraisalservices.com.
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