Legends Valuation Services

06/15/2025

At Legends Valuation Services, we recognize the strength, integrity, and commitment that define exceptional leadership, qualities embodied not only in our work but in the fathers and father figures who guide their families every day.

This Father’s Day, we celebrate the dedication and support that fathers bring to their homes, careers, and communities. Much like a strong foundation supports a property’s long-term value, fathers provide stability, direction, and resilience in every phase of life.

To all the fathers- whether you’re working in the field, leading from the office, or supporting from home- we extend our sincere gratitude.

Happy Father’s Day from all of us at Legends Valuation Services.

05/18/2025

𝐄𝐱𝐩𝐥𝐨𝐫𝐢𝐧𝐠 𝐭𝐡𝐞 𝐈𝐦𝐩𝐚𝐜𝐭 𝐨𝐟 𝐕𝐢𝐫𝐭𝐮𝐚𝐥 𝐇𝐨𝐦𝐞 𝐓𝐨𝐮𝐫𝐬 𝐨𝐧 𝐑𝐞𝐚𝐥 𝐄𝐬𝐭𝐚𝐭𝐞 𝐌𝐚𝐫𝐤𝐞𝐭𝐢𝐧𝐠 𝐓𝐫𝐞𝐧𝐝𝐬

In recent years, the real estate industry has transformed dramatically. One of the most notable changes is the introduction of virtual home tours. This innovation offers agents and prospective buyers a fresh way to interact with properties. By providing immersive experiences, virtual tours are changing how people view homes and make buying decisions. They offer insights and convenience that in-person showings seldom provide.

𝐓𝐡𝐞 𝐀𝐝𝐯𝐚𝐧𝐭𝐚𝐠𝐞𝐬 𝐨𝐟 𝐕𝐢𝐫𝐭𝐮𝐚𝐥 𝐇𝐨𝐦𝐞 𝐓𝐨𝐮𝐫𝐬
Virtual home tours save time for both buyers and sellers. For buyers, these tours offer a chance to explore properties at their own pace, examining each room without the stress of a scheduled appointment. In fact, a Zillow report revealed that homes with virtual tours receive up to 87% more views online compared to those without. This allows buyers to visit multiple properties from the comfort of their own homes, making it easier to narrow down their choices.

For sellers, virtual tours can significantly increase a property's visibility. They can attract a broad audience beyond just local buyers. Statistics show that listings with high-quality virtual tours can lead to 50% faster sales times and a 10% higher sale price compared to traditional listings. This is especially valuable in a competitive market.

Moreover, virtual tours provide detailed visual representations of a home. They often include 360-degree views and accurate floor plans. These features help buyers envision living in the space. This trend reflects buyers' increasing desire for transparency and thorough information during their property search.

𝐂𝐡𝐚𝐧𝐠𝐢𝐧𝐠 𝐁𝐮𝐲𝐞𝐫 𝐁𝐞𝐡𝐚𝐯𝐢𝐨𝐫𝐬
Virtual home tours have reshaped how buyers search for homes. According to a study by the National Association of Realtors, nearly 50% of home buyers reported that they rely on online resources, with virtual tours being a key component of that process. As more tech-savvy younger generations enter the market, the expectation for digital solutions grows.

Buyers now prefer virtual tours as an initial screening tool before committing to in-person visits. This preliminary step saves time and is aligned with modern lifestyles that prioritize convenience. Following the COVID-19 pandemic, many have adapted to virtual interactions in numerous aspects of life, from shopping to socializing. Consequently, this trend is becoming integral to how people engage with real estate.

A strong preference for convenience leads buyers to appreciate the option of viewing homes from their living rooms, creating a less stressful experience. This preference indicates a longer-term shift in buyer behavior that real estate agents must consider to stay competitive.

𝐓𝐡𝐞 𝐑𝐨𝐥𝐞 𝐨𝐟 𝐓𝐞𝐜𝐡𝐧𝐨𝐥𝐨𝐠𝐲 𝐢𝐧 𝐕𝐢𝐫𝐭𝐮𝐚𝐥 𝐓𝐨𝐮𝐫𝐬
The capability of virtual home tours is closely linked to technology. Tools such as 3D imaging, 360-degree photography, and virtual reality have revolutionized property showcasing. These technologies produce high-quality content that highlights essential features of homes.

Several platforms like Matterport and Zillow 3D Home have emerged to help real estate agents create these engaging experiences. These platforms streamline the process, making it easier for agents to produce tours that effectively capture the essence of a property.

As technology advances, the prospects for virtual home tours become even more exciting. Future innovations in augmented reality (AR) and virtual reality (VR) promise to create even richer experiences. Real estate professionals who stay ahead of these trends will benefit greatly from the ability to engage potential buyers.

𝐂𝐡𝐚𝐥𝐥𝐞𝐧𝐠𝐞𝐬 𝐚𝐧𝐝 𝐂𝐨𝐧𝐬𝐢𝐝𝐞𝐫𝐚𝐭𝐢𝐨𝐧𝐬
Despite the benefits, there are challenges to using virtual home tours. Not every property is suited for this format. Homes with unique designs may need innovative approaches to be showcased effectively. Additionally, there is the risk of misrepresentation. Buyers who rely solely on virtual tours may feel let down if a property does not meet their expectations in person. To combat this, real estate agents should prioritize honesty in their listings, making sure tours accurately reflect what buyers can expect.

Another challenge involves market saturation. As virtual tours become standard, standing out requires creativity and high-quality content. Real estate professionals must think outside the box to differentiate their listings in a crowded market, ensuring their virtual tours attract attention and engage viewers.

𝐓𝐡𝐞 𝐅𝐮𝐭𝐮𝐫𝐞 𝐨𝐟 𝐕𝐢𝐫𝐭𝐮𝐚𝐥 𝐇𝐨𝐦𝐞 𝐓𝐨𝐮𝐫𝐬
Looking ahead, virtual home tours are likely to become a staple in real estate marketing. As consumer appetite for digital experiences grows, innovative features such as interactive elements may emerge. These could allow potential buyers to ask questions or request additional information during their virtual viewings in real-time.

Additionally, as data analytics tools improve, agents might glean insights from virtual tour interactions. Understanding which areas garner the most interest can enhance marketing strategies and user experiences.

Given the rising importance of sustainability, virtual home tours may help reduce travel-related carbon footprints associated with traditional home viewings. Fewer in-person visits mean less travel, aligning with both consumer values and environmental considerations.

𝐄𝐦𝐛𝐫𝐚𝐜𝐢𝐧𝐠 𝐭𝐡𝐞 𝐂𝐡𝐚𝐧𝐠𝐞
The rise of virtual home tours marks a crucial evolution in real estate marketing. They provide significant benefits to buyers and sellers alike, emphasizing convenience, efficiency, and transparency. As technology progresses and buyer preferences shift, virtual tours will likely continue to be central in real estate transactions.

For real estate professionals, adapting to this trend is essential. By embracing virtual home tours, agents can better connect with potential buyers and close sales more effectively. As the industry moves forward, virtual tours are set to reshape property marketing, enhancing how homes are showcased and experienced.

05/11/2025

05/06/2025

𝐄𝐯𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧𝐬 𝐯𝐬. 𝐀𝐩𝐩𝐫𝐚𝐢𝐬𝐚𝐥𝐬: 𝐖𝐡𝐚𝐭’𝐬 𝐭𝐡𝐞 𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞 𝐚𝐧𝐝 𝐖𝐡𝐞𝐧 𝐃𝐨𝐞𝐬 𝐈𝐭 𝐌𝐚𝐭𝐭𝐞𝐫?

In recent years, the term "evaluation" has gained more traction in the lending and valuation world especially for transactions that don’t require a full appraisal under federal guidelines. But confusion still lingers around what evaluations actually are, when they’re appropriate, and how they differ from certified appraisals.

🔍 What Is an Evaluation?

An evaluation is an estimate of a property’s market value prepared in a written format, typically for federally regulated financial institutions in certain lending scenarios where a full appraisal is not required by law.

Evaluations are often used for:
- Real estate transactions under $500,000 (for commercial loans)
- Renewals or modifications of existing loans with no significant change in market conditions
- Portfolio reviews
- Internal risk assessments

Unlike appraisals, evaluations are not required to be performed by a licensed or certified appraiser (though many lenders prefer that they are).

📌 Why the Distinction Matters

For clients and lenders, the appeal of evaluations is clear: faster turn times and lower cost. But with that simplicity comes responsibility. An evaluation is still a valuation product it just has fewer regulatory and technical requirements.

For appraisers, this means:

- Liability still exists especially if the evaluation is misleading or lacks market support.
- You should be clear about the scope and limitations.
- You must know your state’s stance as some states allow appraisers to complete evaluations outside USPAP, while others require full USPAP compliance.

🧠 Final Thoughts

Evaluations aren’t a shortcut they’re a different tool for a different need. When done thoughtfully and with appropriate support, evaluations can be a valuable solution for both lenders and clients in low-risk transactions.

However, they should never be mistaken for appraisals. Knowing the difference and communicating it clearly helps protect appraisers, support informed decisions, and maintain trust across all parties involved.

05/02/2025

𝐖𝐡𝐲 𝐒𝐞𝐥𝐥𝐞𝐫𝐬 𝐀𝐫𝐞 𝐂𝐡𝐨𝐨𝐬𝐢𝐧𝐠 𝐀𝐮𝐜𝐭𝐢𝐨𝐧𝐬 𝐎𝐯𝐞𝐫 𝐓𝐫𝐚𝐝𝐢𝐭𝐢𝐨𝐧𝐚𝐥 𝐋𝐢𝐬𝐭𝐢𝐧𝐠𝐬
In today’s evolving real estate landscape, more sellers particularly those with unique, distressed, or high-demand properties are turning to auction services instead of the traditional route of hiring a broker. For appraisers, understanding the auction model is more than just useful context; it can directly influence how we analyze market value, exposure time, and sales strategy assumptions.

𝐓𝐡𝐞 𝐀𝐮𝐜𝐭𝐢𝐨𝐧 𝐀𝐝𝐯𝐚𝐧𝐭𝐚𝐠𝐞: 𝐒𝐩𝐞𝐞𝐝 𝐚𝐧𝐝 𝐂𝐞𝐫𝐭𝐚𝐢𝐧𝐭𝐲

One of the primary advantages of auction marketing is speed. Traditional brokerage models may involve months of listing, showing, negotiating, and renegotiating. Auctions, by contrast, operate on a fixed timeline often marketing for 30-45 days, then selling on a scheduled date. This shortens exposure time and offers a degree of predictability that is rare in conventional sales.

Moreover, auction sales are typically “as-is, where-is”, eliminating prolonged inspection periods and contingencies. From an appraiser’s standpoint, this can clarify adjustments related to sale conditions and help support time-adjusted comparables when market momentum is a factor.

𝐂𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐯𝐞 𝐁𝐢𝐝𝐝𝐢𝐧𝐠 𝐚𝐧𝐝 𝐏𝐫𝐢𝐜𝐞 𝐃𝐢𝐬𝐜𝐨𝐯𝐞𝐫𝐲

In an open and well-marketed auction, buyers compete transparently often pushing the final price above the seller’s minimum or reserve. This bidding environment can establish a true market value, especially for assets that are hard to price due to lack of comparables.

For appraisers, this means an auction result may provide strong evidence of market value when the process includes sufficient exposure and a qualified pool of bidders.

𝐍𝐢𝐜𝐡𝐞 𝐀𝐩𝐩𝐞𝐚𝐥 𝐚𝐧𝐝 𝐁𝐫𝐨𝐚𝐝𝐞𝐫 𝐑𝐞𝐚𝐜𝐡

Auction platforms often specialize in targeted marketing to investors and specific user types, and many have national or global reach. This contrasts with the more local or regional focus of many brokerage listings. As such, auctions can be particularly effective for properties in distress or probate, vacant land or special-use assets, investment properties with unclear upside, and markets where traditional absorption is slow

When an auction results in a successful sale after broad exposure, appraisers may consider it a valid indicator of market value provided the terms align with typical market participants.

As auction platforms become more sophisticated and sellers become more data-driven, appraisers are likely to see more sales transacted via this method. Understanding how auction dynamics influence price, exposure, and buyer motivation is essential in accurately interpreting sales data and providing credible, defensible valuations.

Whether it’s a court-ordered sale, a high-demand commercial asset, or a farm with limited local comps, auctions can often unlock liquidity and market interest where traditional marketing falls short.

If you're working with clients considering an accelerated sales strategy or need support navigating the auction process, we recommend connecting with Rowell Auctions. Based in Georgia and serving the Southeast for over 80 years, Rowell offers a full-service approach to real estate auctions from aggressive marketing to seamless closings. Their team understands the value of informed pricing and clear terms, making them a trusted resource not only for sellers but for appraisers seeking well-documented, market-driven sales data.

https://www.facebook.com/rowellauctions

04/25/2025

𝐄𝐱𝐢𝐬𝐭𝐢𝐧𝐠 𝐇𝐨𝐦𝐞 𝐒𝐚𝐥𝐞𝐬 𝐃𝐫𝐨𝐩

Nationwide unit sales of existing single-family homes declined 5.9% in March from the prior month and also fell 2.4% from a year earlier, as the median sale price posted a 2.7% annual increase to $403,700, the National Association of Realtors reported Thursday.

The trade group said about 4 million single-family homes, including townhouses and condominiums, were sold during the month, marking the slowest March pace since 2009 based on seasonally adjusted annual figures.

“Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates,” NAR Chief Economist Lawrence Yun said in a statement. “Residential housing mobility, currently at historical lows, signals the troublesome possibility of less economic mobility for society.”

Nancy Vanden Houten, lead U.S. economist at forecasting firm Oxford Economics, said March sales trends reversed a surprise uptick posted in February, as for-sale inventory rose sharply from a year earlier. “We expect sales to remain sluggish through the rest of 2025, with elevated mortgage rates alongside a weaker economy weighing on activity,” Vanden Houten said in a statement.

Other analysts have cited lingering high borrowing costs and overall economic uncertainty among factors clouding buyer confidence and keeping prospective sellers on the sidelines. Still, the government reported this week that March sales of newly built single-family houses increased 7.4% from the prior month and topped the year-earlier figure by 6%.

Source: CoStar News, April 24, 2025

04/20/2025

Wishing you a joyful Easter from all of us at Legends Valuation Services! May this season of renewal bring fresh perspective and accurate valuations to all your real estate decisions.

04/17/2025

𝐇𝐨𝐰 𝐭𝐨 𝐔𝐬𝐞 𝐚𝐧 𝐀𝐩𝐩𝐫𝐚𝐢𝐬𝐚𝐥 𝐭𝐨 𝐒𝐭𝐫𝐞𝐧𝐠𝐭𝐡𝐞𝐧 𝐘𝐨𝐮𝐫 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧𝐬

When it comes to commercial real estate investing, your numbers are only as strong as your assumptions. That’s where a professional appraisal can offer serious value, not just for lending, but as a strategic decision-making tool before you buy, sell, or hold.

📊 𝟏. 𝐔𝐧𝐝𝐞𝐫𝐬𝐭𝐚𝐧𝐝 𝐭𝐡𝐞 𝐓𝐫𝐮𝐞 𝐌𝐚𝐫𝐤𝐞𝐭 𝐕𝐚𝐥𝐮𝐞
An appraisal gives you an unbiased, data-backed opinion of a property's fair market value, something a listing price or seller’s estimate won’t always reflect. This helps you avoid overpaying, identify undervalued opportunities, and justify offer prices to partners or lenders. Especially in fluctuating markets, an appraisal can provide clarity on where a property really stands.

📈 𝟐. 𝐀𝐧𝐚𝐥𝐲𝐳𝐞 𝐈𝐧𝐜𝐨𝐦𝐞 𝐏𝐨𝐭𝐞𝐧𝐭𝐢𝐚𝐥 𝐑𝐞𝐚𝐥𝐢𝐬𝐭𝐢𝐜𝐚𝐥𝐥𝐲
For income-producing properties, the appraisal’s Income Approach takes into account:

- Market rent vs. contract rent
- Vacancy and collection losses
- Operating expenses
- Capitalization rates

This analysis gives you a clear view of the asset’s stabilized income performance, which is essential for calculating your return on investment and cash flow projections.

🧱 𝟑. 𝐄𝐯𝐚𝐥𝐮𝐚𝐭𝐞 𝐏𝐡𝐲𝐬𝐢𝐜𝐚𝐥 𝐚𝐧𝐝 𝐅𝐮𝐧𝐜𝐭𝐢𝐨𝐧𝐚𝐥 𝐂𝐡𝐚𝐫𝐚𝐜𝐭𝐞𝐫𝐢𝐬𝐭𝐢𝐜𝐬
The appraisal doesn't just crunch numbers, it also reviews:
- Building condition and deferred maintenance
- Site improvements and layout
- Zoning compliance
- Highest and best use analysis

This insight helps you plan for future capital expenditures, understand any limitations on use or expansion, and flag red flags that may affect resale or leasing.

🔍 𝟒. 𝐂𝐨𝐦𝐩𝐚𝐫𝐞 𝐰𝐢𝐭𝐡 𝐌𝐚𝐫𝐤𝐞𝐭 𝐂𝐨𝐦𝐩𝐬 𝐋𝐢𝐤𝐞 𝐚 𝐏𝐫𝐨
A good appraisal will include recent sales and rent comparables, giving you a snapshot of what similar properties are going for in the market. This can help:

- Support your negotiations with real evidence
- Benchmark your acquisition or disposition strategy
- Stay on top of pricing trends in your asset class

💼 𝟓. 𝐔𝐬𝐞 𝐈𝐭 𝐚𝐬 𝐋𝐞𝐯𝐞𝐫𝐚𝐠𝐞 𝐰𝐢𝐭𝐡 𝐋𝐞𝐧𝐝𝐞𝐫𝐬 𝐚𝐧𝐝 𝐏𝐚𝐫𝐭𝐧𝐞𝐫𝐬
An independent appraisal can validate your deal assumptions when presenting to:
- Lenders (for acquisition, refi, or construction loans)
- Equity partners (to build trust and transparency)
- Buyers/sellers (to support a fair transaction)

It adds legitimacy and confidence to your numbers especially when stakes are high.

✅ 𝐅𝐢𝐧𝐚𝐥 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲: 𝐈𝐭’𝐬 𝐌𝐨𝐫𝐞 𝐓𝐡𝐚𝐧 𝐚 𝐅𝐨𝐫𝐦, 𝐈𝐭’𝐬 𝐚 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐓𝐨𝐨𝐥
An appraisal isn’t just a checkbox for financing. It’s a deep dive into a property’s value, income, and potential risks and it’s a tool smart investors use before, during, and after a transaction. When you use an appraisal proactively, you’re not just buying a property, you’re buying with clarity and confidence.

04/13/2025

𝐖𝐡𝐲 𝐲𝐨𝐮 𝐬𝐡𝐨𝐮𝐥𝐝 𝐜𝐨𝐧𝐬𝐢𝐝𝐞𝐫 𝐚 𝐏𝐫𝐞-𝐋𝐢𝐬𝐭𝐢𝐧𝐠 𝐀𝐩𝐩𝐫𝐚𝐢𝐬𝐚𝐥

Thinking about selling your home? Before you stick that “For Sale” sign in the yard, there’s one powerful step that can help set you up for a smoother, more confident sale: a pre-listing appraisal.

Here at Legends Valuation Services, we are seeing a high demand for pre-listing appraisals in the Atlanta MSA area. Properties are sitting on the market longer, receiving less tour/information requests, and are often times being over priced (resulting in much higher days on market and holding costs to the owner).

While most people associate appraisals with buyers and lenders, sellers can benefit just as much—if not more—by getting an appraisal done before the home even hits the market.

𝐏𝐫𝐢𝐜𝐞 𝐈𝐭 𝐑𝐢𝐠𝐡𝐭 𝐭𝐡𝐞 𝐅𝐢𝐫𝐬𝐭 𝐓𝐢𝐦𝐞 - One of the biggest challenges in real estate is pricing. Overprice, and your home could sit on the market with little interest. Underprice, and you risk leaving money on the table. A pre-listing appraisal gives you an unbiased, professional opinion of value based on current market data.

𝐆𝐚𝐢𝐧 𝐚 𝐍𝐞𝐠𝐨𝐭𝐢𝐚𝐭𝐢𝐨𝐧 𝐄𝐝𝐠𝐞 - Buyers often use the appraisal as a bargaining chip. But if you already have an appraisal in hand, it can help support your asking price and show buyers that you’ve done your homework. This can be especially useful in markets where pricing is competitive or buyers are trying to negotiate below market value.

𝐒𝐩𝐞𝐞𝐝 𝐔𝐩 𝐭𝐡𝐞 𝐒𝐞𝐥𝐥𝐢𝐧𝐠 𝐏𝐫𝐨𝐜𝐞𝐬𝐬- Having a recent appraisal on hand can prevent surprises later in the deal. If you accept an offer and the buyer’s lender orders their own appraisal that comes in lower, it can derail the transaction.

𝐒𝐡𝐨𝐰 𝐓𝐫𝐚𝐧𝐬𝐩𝐚𝐫𝐞𝐧𝐜𝐲 𝐚𝐧𝐝 𝐁𝐮𝐢𝐥𝐝 𝐓𝐫𝐮𝐬𝐭- Providing a pre-listing appraisal up front can help build trust with potential buyers. It shows that you’re serious, informed, and open about the property’s value.

𝐇𝐞𝐥𝐩 𝐒𝐞𝐭 𝐄𝐱𝐩𝐞𝐜𝐭𝐚𝐭𝐢𝐨𝐧𝐬 - A pre-listing appraisal is especially helpful if you’re selling a unique property, in an area with limited comps, or after making major upgrades. It gives both you and your agent a clear idea of how your property fits into the current market and helps guide your pricing and marketing strategy accordingly.

Studies and industry insights suggest that homes priced accurately from the start tend to sell faster and closer to the asking price. For instance, properties that are priced appropriately based on solid appraisal data not only sell closer to their listing price but also faster. This avoids the common pitfalls of undervaluing your home, leaving money on the table, or overpricing, which can lead to your property lingering on the market .

A pre-listing appraisal is a relatively small investment that can save you time, reduce stress, and help you sell smarter. Whether you’re navigating a hot market or preparing for a competitive one, it pays to know your home’s true value before the offers roll in.

Thinking of selling? Reach out to schedule your pre-listing appraisal today.

03/28/2025

𝐓𝐡𝐞 𝐌𝐲𝐭𝐡 𝐨𝐟 𝐁𝐞𝐥𝐨𝐰-𝐆𝐫𝐚𝐝𝐞 𝐒𝐩𝐚𝐜𝐞 𝐢𝐧 𝐓𝐨𝐭𝐚𝐥 𝐋𝐞𝐚𝐬𝐚𝐛𝐥𝐞 𝐀𝐫𝐞𝐚

When it comes to real estate, square footage matters—a lot. Whether you're a landlord, tenant, investor, or appraiser, understanding how space is measured can significantly impact leasing agreements and property values. However, one common myth persists in commercial and residential real estate: "Below-grade space is included in total leasable area."

𝐖𝐡𝐚𝐭 𝐈𝐬 𝐁𝐞𝐥𝐨𝐰-𝐆𝐫𝐚𝐝𝐞 𝐒𝐩𝐚𝐜𝐞?

Below-grade space refers to any portion of a building that is partially or fully below ground level. This includes basements, lower levels, and walkout basements, even if they have windows or exterior access. While below-grade areas can certainly serve functional purposes—such as offices, storage, or even retail—they are not always included in a property's total leasable or rentable square footage.

𝐖𝐡𝐲 𝐁𝐞𝐥𝐨𝐰-𝐆𝐫𝐚𝐝𝐞 𝐒𝐩𝐚𝐜𝐞 𝐈𝐬 𝐍𝐎𝐓 𝐓𝐲𝐩𝐢𝐜𝐚𝐥𝐥𝐲 𝐂𝐨𝐮𝐧𝐭𝐞𝐝 𝐢𝐧 𝐋𝐞𝐚𝐬𝐚𝐛𝐥𝐞 𝐀𝐫𝐞𝐚

Industry Standards Exclude It

Appraisal and leasing professionals typically follow guidelines set by organizations like BOMA (Building Owners and Managers Association) and ANSI (American National Standards Institute). These standards usually exclude below-grade space from gross leasable area unless it meets specific usability criteria.

Perceived Value Differences

Even when finished, below-grade space is often valued lower than above-grade space because of limited natural light, potential moisture or structural concerns, lower ceiling height, and perceived desirability by tenants.

Because of this, appraisers usually adjust valuations accordingly rather than including these areas at the same rate as above-grade spaces.

Lease Agreement Clarity

In commercial real estate, total rentable square footage directly affects lease pricing. If a landlord incorrectly includes below-grade space in the total leasable area, it can lead to mispricing, disputes, and legal issues. Tenants often negotiate based on what is truly "usable" space.

𝐖𝐡𝐞𝐧 𝐂𝐚𝐧 𝐁𝐞𝐥𝐨𝐰-𝐆𝐫𝐚𝐝𝐞 𝐬𝐩𝐚𝐜𝐞 𝐁𝐞 𝐈𝐧𝐜𝐥𝐮𝐝𝐞𝐝?

There are exceptions where below-grade space can be counted toward total leasable area:

✔ Walkout basements with direct exterior access and significant usability (e.g., retail or office space with full windows).

✔ Fully finished lower levels in commercial properties designed for continuous tenant use (e.g., underground shopping centers, fitness studios).

✔ Buildings where below-grade space is the primary usable space, such as in urban environments where lower levels function as storefronts.

𝐅𝐢𝐧𝐚𝐥 𝐓𝐡𝐨𝐮𝐠𝐡𝐭𝐬

If you're leasing, selling, or appraising a property, it's critical to verify how below-grade space is accounted for. Relying on myths instead of industry standards can lead to overestimating leasable area, mispricing, and potential legal complications.