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Not a week goes by that I do not have this question asked of me. "Why did you not include my basement in your square footage." Simple answer, "I did." Realtors, Homeowners and other Client's often and understandably misunderstand how basements are handled on a Real Estate Appraisal. Basement areas are defined by law as any area of a house that is below grade in any amount. Grade is ground or soil. Even if one exterior wall is partially below grade (ground level) it is considered a basement and cannot be included in the “Above Grade Living Area.” It is however included in the appraisal on the separate line item below the above grade square footage. This is found on Page 2 of the URAR Form. It is located in the middle of the Sales Comparison Approach. Here is the segregation: Above Grade Room Count : 8 3 2 (8 rooms, 3 bedrooms and 2 full baths) Gross Living Area: 1,800 Square Feet (Above the ground) Basement & Finished Rooms Below Grade: 1,800 Square Feet (Below the ground or grade) The house being appraised has 1,800 SF of above grade living area and 1,800 SF of below grade living area. Now for the confusing part. One would logically think, "Ok my house has 3,600 SF of heated living area." And frankly it does, but it would create a misleading report if the Appraiser compared your 1,800 SF house with an 1,800 SF Basement with a 3,600 SF house all above grade. In my market buyers pay less for below grade living areas. More information can be found on the NC Carolina Real Estate Commission's Website. Clip and Paste this site into your browser: http://www.ncrec.gov/Brochures/Measurement%20booklet%202013.pdf I hope this helps. It is confusing and frustrating for both homeowners, appraisers and particularly real estate agents who routinely will include the basement in the above grade living area. But it is the way we as Professionals are required by law to perform our work. David S. Massey President Massey Appraisals State Certified General Real Estate Appraiser A2912