When purchasing a home, it’s wise to compare the advertised square footage with the data on the Multiple Listing Service (MLS) and in tax records. Identifying and understanding any discrepancies is crucial.
The MLS draws its information from the official square footage in county assessor office records. These offices typically assess properties at their highest values annually for maximum property tax collection. During recessions, however, these values are often kept artificially high.
As a property owner, you might prefer the assessor’s office to record a lower square footage than the actual, to avoid higher taxes. After a remodel, updating your property details with the city can lead to increased property taxes, something I learned from personal experience.
On the flip side, when selling a property, a higher recorded square footage can maximize the sale price. Thus, if you plan to sell within a few years, updating the assessor’s office with the correct, larger square footage might be beneficial.
Sellers sometimes exaggerate livable square footage in marketing materials, adding disclaimers for buyers to verify this information independently.
This post covers:
- Common reasons for incorrect square footage
- Verifying the correct square footage
- Calculating square footage for real estate listings
Common Reasons for Incorrect Square Footage
Over my two decades of visiting open houses, I’ve noticed that advertised square footage often exceeds what’s in the tax records.
- Outdated Tax Records: Tax records update only after a sale or permitted remodel. Without these events, tax records might not reflect current housing details, including updated square footage. Online portals can take time to reflect these changes.
- Unpermitted Renovations: Homeowners often avoid permits to save on costs and avoid higher taxes. Unpermitted work, whether minor or major, won’t show in tax records. This can lead to discrepancies in square footage over time, especially if the property has had a long ownership duration.
- Lack of Recent Appraisals: Selling a house often involves an appraisal, especially if there hasn’t been one in a long time. Banks require appraisals for mortgage approval. Independent appraisals help both buyers and sellers feel more confident about the transaction.
- Differences in MLS and County Assessor’s Records: The MLS tax data may not always align with the county assessor’s information. Buyers should conduct independent appraisals for accurate square footage.
Importance of Accurate Square Footage
- Buyer Criteria: Square footage is a key criterion for buyers. Sellers often omit square footage in listings if it makes the property appear overpriced on a price/square foot basis.
- Seller Credibility: Accuracy in square footage enhances a seller’s credibility. Just as full maintenance records for a car are preferred, transparency in property details is valued.
- Legal and Financial Ramifications: Misrepresentation or incorrect square footage can lead to fines or lawsuits. The MLS may impose fines for wrong listings, and discrepancies can lead to contract terminations.
Proving Accurate Square Footage
Documents that can verify a home’s square footage include recent professional appraisals, updated county records, floor plans, and blueprints for new constructions.
Defining Livable Square Footage
Livable square footage, or the ‘living area,’ includes space used for human occupancy, fulfilling criteria of being heated, finished, and directly accessible from other living areas.
Measuring Square Footage According to MLS Guidelines
- Measure the exterior walls.
- Draw a floor plan for inaccessible interior spaces.
- When uncertain, engage a professional for accurate measurements.
Above-Grade and Below-Grade Areas
MLS listings might require separate listings for above-grade (above ground) and below-grade (like basements) areas.
Real estate agents should assist in measuring square footage, or you can hire a professional appraiser. Remember, your measurements are not official proof; certified documents are necessary.
Buyer’s Due Diligence
As a buyer, don’t take marketing material at face value. Measure and verify the home’s square footage yourself. Buying a home with incorrect square footage can significantly affect its value.
Understanding the importance of square footage accuracy can help in identifying undervalued properties, potentially unlocking substantial value.
