Below is a guest blog post by Tim Richmond of 1st Tribal Lending. At the end of his blog post are some additions from me about square footage as it relates to Tulsa Oklahoma real estate.
What is the square footage of the house? This is often one of the first questions that will arise when buyers are presented with a prospective new home. It has become the benchmark that home buyers, sellers, and real estate agents use to determine the value of any given property. At face value it allows buyers to determine if a home could be considered a deal. We squeal with glee when we realize the property is $10, $20, or $30 less per square foot than other homes in the area. It is important for home buyers to understand how square footage is determined before grasping onto the idea that you are receiving a bargain.
Square Footage Deception
In 2011, a New York home seeker named Bhandari discovered that the apartment he was going to purchase was 100 feet less than its listed price. The discovery that the home was smaller than he expected, hit him hard, as you can imagine. The misrepresentation meant two things: a smaller home and a slightly higher price per square foot than expected. Both are deal killers for some home buyers. There have been other cases where the square footage listed is not an accurate assessment of the buildings actual size. It is vital that all home owners be aware that they should not blindly trust that the home’s size has been listed accurately.
Square Footage Laws
In order to determine whether the square footage is accurate, home owners must be aware how square footage is tallied. There is not one national or professional standard that is used to measure square footage. Appraisers, developers, tax assessors, and realtors all have different standards that they use to tally up how large a home is.
- Appraisers measure livable areas. They measure the outside dimensions for family homes and take inside measurements for condos. Homes are not measured below ground level and garages are not included, and unheated bonus rooms may be left out, although they may tally up these rooms and make note of their dimensions separately.
- Tax assessors only measure livable areas. This means that garage, basements, and unfinished rooms are excluded.
- Developers measure everything. Basements, garages, balconies, and decks.
- Realtors don’t measure square footage themselves. This is in part to prevent being sued for misrepresentation. This means that how square foot is determined for each house is dependent on the number that the sellers have available.
Ask questions. Do your own research before committing. Did they use an appraiser, developer, or tax assessor standards? Did they include the square foot of the basement or an unheated bonus room? Did they include the garage? Remember, as a homebuyer it is your right to ask how the square footage was measured.
Don’t feel like you need to take their word at face value. It is legal in some areas for realtors to estimate the size of the home. This means if they want to round up to 900 square feet when the actual number is 833, well it’s within the realm of possibility. [Lori’s note: this is not legal in Oklahoma.] Ask to see the floor plans of the house. Look at the tax records. Request that your own appraiser measure out the property if you really think something doesn’t measure up.
Beyond Square Footage
It is important to keep in mind that square footage is only useful when comparing homes that have a similar make, size, and location. This means that you cannot compare the price of homes per square footage between Nampa, Idaho and Bronx, New York. You should also remember that square footage does not keep in mind the quality of the products or amenities within the home. If the home has a fully furnished bathroom and kitchen, you should expect a slight climb and the price per square foot. Square footage is a tool, and should not be used as the sole determining factor of value.
Tim Richmond uses his real estate and finance knowledge to help others achieve the best deal possible when purchasing their first home. He works with 1st Tribal Lending to helping Native American home buyers make financial decisions when purchasing their first home.
Additions from Lori:
Oklahoma and Square Footage Laws
In 2009, the Oklahoma Supreme Court found in Bowman v. Presley that the REALTORS in a particular transaction could have misrepresented the accurate square footage.
As a result of this ruling, we now have home buyers fill out a disclosure stating that (1) they are not purchasing this home based on reported square footage; or that (2) if square footage is important to them, they will have it measured.
Our MLS (Multiple Listing Service) only allows square footage from two sources: (1) court house records/tax records or (2) an appraisal. Few REALTORS realize that the cost to get a square footage appraisal is only $75-$100, so I always recommend that Sellers take that extra step. Then report both square footage amounts and let the Buyer decided if they want to get a third opinion. You can find appraisers who offer this service on my Preferred Vendor list on my web site.
Content published by Lori Cain.