Short answer: no. Not as gross living area, which is the number your appraisal is built on.
I know that's not what anybody wants to hear, especially if you spent two winters and real money finishing that lower level. So let me explain what's actually going on, because the space isn't worthless — it's just counted differently, and there's a difference.
The rule
Appraisers measure to a standard called ANSI Z765-2021. Fannie Mae started requiring it in April 2022 and Freddie Mac adopted it in November 2023, so this has been the rule for a few years now on the appraisals it applies to — those with a full interior and exterior inspection on a one-unit property.
Fannie Mae's own guide puts it about as plainly as it can be put. The appraiser must consider a level to be below grade if any portion of it is below grade — regardless of the quality of its finish, or the window area of any room.
Read that twice. Not the finish. Not the windows.
That means the 2,400 square foot house you think you have might be a 1,700 square foot house with 700 finished feet downstairs.
What's changing this year
The rule itself isn't changing. What's changing is how visible it is.
The new appraisal report — the one that becomes mandatory November 2, 2026, though appraisers have been able to use it since January — reports finished area by level as part of the form's structure. Below-grade area counts as its own level. And the levels have to match the room-by-room detail elsewhere in the report.
So the thing that used to occasionally get blurry — a listing with an inflated square footage number that nobody reconciled until closing — is sitting in a structure now that makes the discrepancy obvious.
Why this matters more here than most places
Drive around Killingly, Brooklyn, Plainfield, Putnam. We're loaded with raised ranches and split-levels, and a huge number of them have a finished lower level. Half of them have a walkout with a slider and full windows that gets more daylight than some second floors.
Here's the part that stings: that walkout is still below grade. Sunlight isn't the test. Neither is how nice it is. If any portion of the level is below the surrounding grade, the whole level is below grade.
I've had sellers hand me a tax card, a builder's brochure, and a previous listing that all said one number, and the measurement came in several hundred feet lower. Nobody lied. They were measuring by a different rulebook.
So is the space worth nothing?
No — and this is where people over-correct.
Below-grade finished area gets reported, and it gets accounted for when your house is compared to what else sold. A house with 700 finished feet downstairs is worth more than the identical house with a bare block basement. It just usually isn't worth the same per foot as the space upstairs, and it doesn't get added into the headline square footage.
Which, if you think about it, is roughly how buyers have always felt about basements. The standard just made everyone measure it the same way.
What to do about it
Don't put it in the square footage. If your listing says 2,400 and the appraisal says 1,700, you've made a problem for yourself at the worst possible moment — after you've accepted an offer, when the buyer's lender is looking for a reason to be nervous.
Do describe it separately, and describe it well. "1,700 sq ft plus a 700 sq ft finished walkout lower level with a full bath" is honest, and it sells. It tells a buyer everything the inflated number was trying to tell them without setting up a fight over the appraisal.
Check your tax card against reality. Assessors don't all measure to ANSI, and town records around here can be old. What the town says and what an appraiser will measure are two different numbers more often than you'd think.
If you're not sure what you've actually got
Send me the address. I'll tell you what it measures out to, what the finished lower level is realistically adding, and what the house would sell for today.
No charge, and I'm not going to chase you if you don't want to go any further.
Skyla Gagnon 🗝️ SOLDBYSKYLA · 860-617-8493 · RE/MAX Bell Park
