Thursday, May 11, 2017

The Size of Your Property Depends on Who You Ask - The Square Footage Question

I sell real estate.  But when buying a residential property, the question of “How much real estate am I buying?” is answered with square footage.  Surprisingly, square footage isn’t a hard and fast measurement.  In fact, measurements can vary depending on the source of the measurement and what is included in the measurement. And, invariably, if you have three different people measure the same property, you will have three different measurements.

In our market, most real estate brokers pull the County Assessor square footage measurement. With new construction, the square footage measurement comes from the builder.  Builders’ measurements, in our market, are usually bigger than the County Assessor’s measurement.   Finally, appraisers often measure properties when doing an appraisal, and brokers can use this measurement as the square footage source. 

I talked with an appraiser at our local Assessor’s office and was told that for single family homes and townhomes, the Assessor’s office looks at the plans for new builds and they physically measure the house.  These measurements are from the exterior walls.  With condos, the frame of the unit is measured and the calculation comes from the interior of the unit.  If there is an addition, the Assessor’s office will do the same as a new build – look at the plans and measure the space. 

So what are you to do if you have concerns about the square footage of the property you are buying?  My first bit of advice is, if the property works for you, then don’t worry too much about the square footage measurement.  If you feel like you are paying a fair price for the property, enjoy it for years to come.  If, however, you are paying a premium for the property, and the difference in square footage can make a substantial difference in pricing, you may have concerns that you are overpaying. 

First, ask for the source of the square footage measurement.  In Colorado, when a broker lists the square footage source, we are supposed to have a document backing up that measurement.  I personally have had sellers tell me that their properties are larger than the measurement I pull from the Assessor’s office.  If they can provide me with a document in writing – builder’s measurements from plans or an appraisal -- then I can use that square footage measurement.  This disclosure is just that – a disclosure.  It is in no way a “guarantee” that the square footage number is perfect.  It is the closest and best measurement, backed up with a document, that the seller can produce. 

Sometimes discrepancies are caused by what is included in the measurement.  For instance, one measurement may include the garage, and one may not.  Or, in some markets, outdoor square footage such as patios or enclosed lanais are included in the measurement.   Ask your Realtor to pull comparable properties from the MLS and compare the measurements to make sure you are comparing apples to apples. 

Second, you could hire someone to measure the property for you to get your own measurement.  Appraisers will do this service.  You can then see whether your measurement is close, or close enough, to the disclosure to make you feel comfortable.  Remember, that square footage isn’t an exact science so you will likely not have the exact same measurement as the disclosure.

Finally, if you think there is a huge discrepancy between the square footage amount disclosed and the square footage you measured, it might be time to put the brakes on the contract and do more investigation.  If you can’t justify the price for the square footage, then look for a new property.

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