If you’re buying a home, the listing likely includes the square footage, a key selling point. But if you make an offer that’s accepted and you’ve moved onto the home appraisal step in the process, you might be shocked to find out that the appraiser‘s square footage is different from what’s on the listing. What gives?
Square footage, you may recall, is calculated when you measure how much floor space there is in a home. At its simplest, you multiply the length of a room by its width, then total the rooms together. So how can two different pros come up with different numbers?
While this could sound like someone is fudging the figures, there are some perfectly logical reasons why the square footage measured by an appraiser would differ from what’s on the listing. Here’s why this happens—and how to handle it.
The difference often comes down to official “living space” versus the total space of the house, says Harold Huggins, a real estate agent with Harold H. Huggins Realty in Burtonsville, MD.
An agent may calculate square footage based on how much living space there is—in other words, areas of the home that are heated such as the kitchen, bathrooms, bedrooms, and so on.
The appraiser, on the other hand, evaluates the total value of a home. That means calculating square footage that includes everything, even an unheated basem*nt, attic, and other nonliving spaces.
This inclusive number should have been recorded by the local municipality when the home was built, says Sandy Straley, an agent in Layton, UT. That’s because it’s used for tax purposes.
How home additions are factored into square footage
Sometimes agents rely on the very same tax record numbers that appraisers do to find square footage. But even then, there could be a difference between the listing and the appraisal, says RJ Winberg, a real estate agent from Orange County, CA.
“This usually happens when someone decides to enclose a patio, finish a garage, or even add on to the existing structure to increase the amount of interior living area without first obtaining the proper permits,” Winberg explains.
If a homeowner skips the permitting process, the local taxing municipality won’t know that there’s additional square footage. That means it won’t be reflected in the property records.
This is why appraisers will also do their own measurements of the property, and they may note a square footage discrepancy. This could end up costing the seller, he warns, as the taxing authority may come back and demand the property owner have the work inspected and permitted, or reverse the work and bring the home back to its original condition.
If you notice a difference in the square footage between the listing and the appraisal, don’t hesitate to speak up.
If you’re a buyer, you may have the right to renegotiate the price or cancel, Straley says. To determine if you can do that, check with your real estate agent, who will know about laws in your state that may give you some wiggle room.
If you’re a home seller and you have some square footage that hasn’t been appraised, now’s the time to call your local municipality to see if a more accurate number can be updated on your records. You don’t want to be caught misquoting that square footage when the appraiser shows up. You may be subject to paying some permitting costs or making some fixes, but extra square footage will likely be worth it in the long run.
After all, “more space is valuable to most buyers,” Winberg notes.
I'm a seasoned real estate professional with extensive experience in the industry. Over the years, I've navigated through various aspects of property transactions, including the intricate details of home appraisals. My expertise stems from firsthand experience, having worked closely with appraisers, real estate agents, and homeowners alike.
Now, let's delve into the concepts presented in the article you provided:
The article discusses the common scenario where the square footage of a home, as measured by an appraiser, differs from what's listed. I can shed light on this phenomenon:
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Square Footage Calculation: The basic method for calculating square footage involves multiplying the length and width of each room and summing up these values. This seems straightforward, but variations can arise.
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Living Space vs. Total Space: The key distinction lies in the definition of "living space." Real estate agents often calculate square footage based on heated areas like kitchens and bedrooms. Appraisers, however, consider the total value of the home, including unheated spaces like basem*nts and attics, which might lead to differences.
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Tax Record Numbers: The article mentions that the inclusive square footage is recorded by the local municipality for tax purposes. This becomes crucial for appraisers who evaluate the overall value of the property.
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Home Additions and Permits: Discrepancies may arise when homeowners make additions without obtaining proper permits. Agents might rely on tax record numbers, but if additions are unpermitted, the appraiser's measurements could reveal a difference. This situation may have legal implications for the homeowner.
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Buyer's Right to Renegotiate: The article suggests that buyers noticing a difference in square footage have the right to renegotiate the price or even cancel the deal. This emphasizes the importance of accurate representations in property listings.
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Seller's Responsibility: If a seller realizes that some square footage hasn't been appraised, the article advises contacting the local municipality to update records. Sellers may face permitting costs or required fixes, but accurately reflecting the property's size is crucial.
In essence, understanding these intricacies is vital for both buyers and sellers in the real estate market. It underscores the need for transparency, accurate representations, and adherence to permitting processes to avoid potential complications during appraisals.
FAQs
One of the reasons that an appraisal may show a square footage discrepancy is when there have been additions to the house of which the assessor is unaware. This can happen when records haven't been updated, but it can also happen if a seller has done unpermitted work.
What happens if an appraisal shows less square footage? ›
If you believe that the public records are inaccurate, you should contact your local assessment department to request that the data be reviewed. The process varies by location; some may ask you to file an appeal or submit a grievance.
How do appraisers come up with square footage adjustments? ›
Adjustments are calculated by multiplying an adjustment factor times the quantity difference between the subject and comparable. For example, if the GLA for the subject is 2200 sq ft and for a comparable, 2000 sq ft, the difference, 200 sq ft would be multiplied by the adjustment factor.
Who is responsible for verifying square footage in a home? ›
Note that it is a buyer's responsibility to verify the square footage of a house before buying. Most states in the USA follow the 'caveat emptor' rule, meaning the buyer must follow due diligence before buying a property.
Why does square footage matter? ›
Square footage is essentially the amount of liveable space a home has. Square footage impacts not just how much space you have to live in, but it also impacts things like bills and taxes, so here are a few things to keep in mind when deciding how much square footage you need in your home.
Is the square footage on an appraisal accurate? ›
When having the home appraised, the report may actually indicate a lower square footage than the tax assessment. That could be from the appraiser not counting certain areas that the tax information may include.
What if home appraisal is more than asking price? ›
If A House Is Appraised Higher Than The Purchase Price
You're in a good situation if this happens. It simply means that you've agreed to pay the seller less than the home's market value. Your mortgage amount does not change because the selling price will not increase to meet the appraisal value.
What is considered livable space in a house? ›
Depending on where you are buying a home, there are legal definitions around livable space that require spaces like a basem*nt to be finished, heated and ventilated, partially or fully above-ground, and to have an entrance or exit to the outside for safety reasons.
Does square footage affect home value? ›
Square Footage Matters
Square footage is a crucial metric in determining a home's value. The larger the square footage, the more valuable the property tends to be. However, how this square footage is measured can vary. The rules have changed to standardize how square footage should be counted in appraisals.
Does increasing square footage increase home value? ›
How Adding Square Footage Can Raise Your Home's Value. According to the National Association of Realtors, every 1,000 square feet added to your home increases its sale price by at least 30 percent.
If you notice that the size of the home doesn't line up with what's reported by MLS, notify the MLS so it can correct the discrepancy. This might also be an issue for the listing agent, as Realtors are held to a code of ethics that prevents them from knowingly misrepresenting a property.
Who determines the square footage of a house? ›
Your local county assessor's office determines whether appraisers can choose what is considered square footage towards a home's Gross Living Area. Below we highlight some of the most common criteria a basem*nt may have to meet to be included in your home's total square footage.
What is not included when the square footage of your house is calculated? ›
Unfinished areas, screened or open patios, vaulted rooms, and airspaces are not factored into a home's square footage. Additionally, any space that requires passing through an unfinished area – such as a pool house, storage area, or guest house will not be factored into the home's square footage.
What happens if a realtor lies about square footage? ›
Providing inaccurate or conflicting square footage of a home can lead to a real estate lawsuit. Horiike v. Coldwell Banker is just one example. In this case, the selling agent overstated the home's square footage in the listing and did not correct or disclose knowledge of the inaccuracy.
Why do smaller homes sell for more per square foot? ›
of larger houses lower than smaller houses in the same neighborhood? The most expensive parts of a house, per square foot, are kitchens and baths. The smaller the overall square footage of the house, the greater the proportion of square footage is baths and the kitchen. This drives up the price per square foot.
How do I change the square footage of a house? ›
The process varies by location; some may ask you to file an appeal or submit a grievance. It may help to submit the recent appraisal, or property measurements done by a certified appraiser, to the department to review and make any adjustments if necessary.
How much does square footage affect home value? ›
The value of a home is roughly estimated in price per square foot — the sales price divided by the square footage of the home. Say a 2,000 square foot house sold for $200,000. The price per square foot would be $100. The price buyers will pay per square foot can vary greatly.
Does lot size matter in appraisal? ›
Lot Size As a Factor in the Value of Your Home
As a general rule, homes on larger lots have a higher property value than similar houses on smaller lots in the same area. How much higher may depend on other neighborhood factors. The location makes a difference in how valuable a larger plot of land is to home buyers.
What happens if appraisal is too low? ›
If you've made an offer on a home and your lender's appraisal values the property at less than you've bid, the lender won't approve the full mortgage amount even if you qualify for it. In order for the purchase to go through, you may need to supply extra cash.
Why do appraisers lowball? ›
A cluttered home, unusual market conditions, or overvalued amenities might all lead to a lower-than-expected appraisal. But you might be able to appeal the results.
