How to report square footage

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10/09/2015 | Author: Editorial Staff

I represent a seller whose existing survey has one number for the square footage while the appraisal district has another number. How should I report this to potential buyers?

If you list the square footage of a property, you should always quote the information source and let prospective buyers know if you have any reason to know that the information is false or inaccurate. Use the Notice of Information from Other Sources (TAR 2502) to report this information. 

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Categories: Forms, Legal
Tags: legal, legal faq, forms, sellers


Comments

James DeBerry on 10/16/2015

Don, even a patio, at least for me, is a living area. But for appraisal, listing and selling purposes, the GLA is considered the enclosed space that is humanly usable space, typically cooled or heated, that is not used for car storage. Additions like an enclosed patio (sun room) are living space as well; but only to the extent of the construction, modification and usefulness as living space, should it be considered as valuable as the “main” or “original” square footage of living area. An enclosed garage may be completely unrecognizable as a former garage, but in a conforming neighborhood, it is a house that is missing a garage. That has to discount its contributory value. It certainly affects the marketability in most cases.

Earnest on 10/16/2015

Judy Sacky, I agree with Bob Hatfield.  A/C area cannot be a determining factor in figuring sq. ft.  I have a 3 car garage, with insulated doors/ and insulated windows, that is A/C ed.  I increased the size of my unit to carry the extra sq ft, so it is tied into the main unit.  But it is still a Garage.

Bob Hatfield on 10/16/2015

In response to Judy Sacky’s post: It isn’t unusual for agents to misread builder plans and include the total slab area - it looks better, too. I haven’t seen a builder claim total living area as being the slab area, but if someone is doing that they are asking for trouble. HVAC isn’t the determining factor for Gross Living Area, either. There are plenty of garages that have heating/cooling ducts, but the presence of them doesn’t change the intended use of the space as a garage. The same is true with sunrooms or enclosed porches that have individual wall heat pumps (like in some hotels) or, especially, window units. Heat/AC alone isn’t enough for change the use.

As an added issue, Gross Living Area from an appraisal standpoint varies. FannieMae and other secondary market sources define GLA as finished, heated areas above grade. Finished basement (any portion of living area that is below or partially below grade) is not included in GLA for those purposes - there is a separate line item for such areas.

Lastly, not all appraisers carry E&O insurance. It is not a requirement in all states. While E&O may seem a great idea, it also invites litigation. Most national lenders, however, require E&O coverage for any appraiser who completes assignments for them. In those areas where E&O isn’t a state requirement, they have to either find an appraiser who does have it, or obtain lender approval to use an appraiser who doesn’t carry it. Lenders don’t like to do that.

Don on 10/16/2015

It is very strange how some areas consider only heated and airconditioned space as the living area. Also that space is not as valuable as the are that does have heat and air.  There are some areas in the Americas that have neither values are not determined upon heat and air space only.  To say that a Sun Room is not living area is not correct. Appraisals are not made on the square footage of the living area only.

Alice Caron on 10/16/2015

Add in another wrinkle when you get an agreed on square footage but proper permits were not closed out or even opened and you’re claiming additional size!

Jay Press on 10/16/2015

If there is any discrepancy in living area, it is to the benefit of every seller to contact a local appraiser and have them measure the dwelling and provide a computer calculated sketch.  As stated by most Realtors, Buyers should confirm the living area size through their own methods. 

A large percentage of uninformed homeowners consider attached non-HVAC sunrooms as living area when that is the not the case.  Also, fully finished basements should NOT be included into the total living area size.  This is somewhat of a common practice by Realtors, Agents, and Homeowners in order to bring the “price per square foot” down in an attempt to make the home appear extremely well priced.  All basements (finished or not) have their own separate value and are never to be included into the total living area size.

It is always a smart decision to hire a local appraiser to do the calculations and advise on what can be or can’t be included.  It is well worth the $75 to $125 cost of a measurement from a licensed appraiser to prevent any future concerns and/or lawsuits.  A part of this inexpensive cost may also include discovery of other concerns by the same appraiser for the eventual listing that some Realtors, Agents, Homeowners, and/or inspectors may miss that effect value.  Items such as tandem bedrooms, sloping floors, non-permitted uses, etc.; which all could change the overall value and/or create future problems.  A dwelling sketch to scale with approximate interior room walls could also prove very helpful for a potential buyer to determine if their furniture would fit and be a great reference for home comparisons and room flow.

All appraisers have E & O insurance.  So, put the worry on someone else.

Chris Rosprim on 10/16/2015

SF advertised for sale of homes should be that which is living area and should not include the garage or patios or such that is NON HVAC.

JUDY SACKY on 10/16/2015

I looked at a home with intent to purchase, the flyer/mls info stated it
to be approx 2168 lvg. sq footage. However, my husband and I both
questioned the accuracy as our home is stated 1997 sq.ft   The only
way we could come up with the stated 2168 was by adding in the
garage and a covered patio across the back.  I was given a floor plan
from the builder stating the sq ft. If you deduct a two car garage+golf
cart garage and a lg patio across the bk we were lucky to hit 1700
sq ft. I feel that builders should note on their floor plans that the
sq. footage does OR does NOT include garage space etc. The garage
is NOT air conditioned.  Actual square footage should be only that
which is covered under ac/ht. Your thoughts.
Thank you

N. Summer Jung on 10/15/2015

HI Violetta, that is the real question. Honestly, until recently the buyer was paying for the appraisal and the lender was not even required to give them a copy. The mortgage business has never learned the 1st rule of business “The customer is always right”, and has gotten away with walking all over the home buyer for decades, government regulations are the only thing keeping lenders remotely in line. A few years ago, a regulation was finally passed requiring the loan companies to give the borrower a copy of the appraisal 3 days before closing, and even then the lenders have tried to weasel out of it by having a “waiver” that the borrower can sign stating they don’t want a copy…then having them sign so many papers that quite often they don’t realize what they are signing. You do realize the money being loaned is NOT the bank’s money? It is our tax dollars being loaned BACK to us that we are paying interest on. But this is off the subject of square footage..so enough of that for now.

Violeta on 10/15/2015

Why is the owner of the appraisal the bank. The Buyer is the
one paying for it.

N. Summer Jung on 10/15/2015

If it is a one-story home, county records are usually fine, the assessor measures the outside around the foundation, and after 12 years experience as an appraiser, my measurements are usually within 50 sq. ft. of the county’s as far as the 1st floor goes, occasionally there is a laundry room without a window that bumps in or out of the garage, but that won’t effect your price tag significantly.  The second floor is another matter, the county is NOT required to be right, the law as written makes it the OWNER’S responsibility to inform the county if the data is not accurate, and therefore the county assessor simpy “guesstimates” the 2nd floor area, and that guess will stand with the county until proven wrong by the owner. Your Appraiser however, is REQUIRED by license law to be as accurate as possible, and after all these years, the county is almost never “right” about the 2nd floor, typically the 2nd floor is larger than expected, but occasionally it is not, and that CAN effect the price if the discrepancy is over 100 sq. ft. I recommend requesting a parcel card from the county that shows their sketch of the building, and simply eyeball the 2nd floor for accuracy before listing the house. If the 2nd floor is including a 300 sq. ft. area over the master bedroom as square footage, when the master has vaulted ceilings and there is no 2nd floor above it, you have a problem, and will need to get correct measurements. You don’t even need to measure or do the math, just take a look and see if the sketch matches up to the house. If it looks good, well, you’ve been in it, you know the layout. The problems arise when no one checks anything out, including the owner who has lived there 10 years paying property taxes on that non-existent 300 sq. ft., and the appraisal comes in less than the contract price due to the discrepancy in GLA. Good luck out there, realtors do an awesome job most of the time, and a few minutes research can prevent any difficulties from arising later on. Warmest Regards, ~Summer

Bill Bailey on 10/15/2015

I had a listing several years ago on a two story home in the country. When I pulled the appraisal district numbers and did my measurements, I found a large discrepancy, they had simply doubled the size of the bottom floor. I contacted the appraisal district, walked thru with the appraiser, demanded a change. The seller had been paying taxes on non existing square footage for years.

Bob Hatfield on 10/15/2015

I’m an appraiser with 25 years experience, a Texas broker, TREC-licensed instructor and MCE provider, and author of my own MCE classes specifically designed from an appraiser’s viewpoint to benefit Texas REALTORS. I can say with confidence that there is no definitive source for exact size of most houses. Unless the house is a square or rectangle, and even then, there will be rounding issues with any measurement. Most appraisers use ANSI standards, but still round to some degree - nearest quarter inch is most common. CAD measurements vary widely throughout the state. Some ADs exclude bay window areas, others round up to the nearest foot. I have a seven county coverage area, and no two ADs measure the same way. One will routinely use builder-provided plans in tract-style S/Ds and never even pull out a tape measure. Most ADs haven’t been to any particular house in years, and a lot of the staff who originally measured houses have long since retired. Except for blind luck or building permits, CAD won’t usually know if there have been additions or enclosures. As some previously mentioned, surveys don’t include second floor area. In addition, they often round to the nearest foot. When asked, which is often, I always recommend that the seller or listing agent hire a local appraiser to measure a complicated house, disclosing that the intended use of the sketch will be to assist in marketing and that the appraiser’s name will be mentioned in MLS as the source. Don’t use a previous appraisal, even if the seller has it - as was also previously mentioned, the appraisal isn’t the seller’s to pass out to whomever he/she decides. There have been rumors lately of case law that supports the appraiser’s claim of copyright protections against consumers using the appraiser’s data or analysis - including the sketch. Always keep liability in mind, and if there has been additions or enclosures that are not reflected in CAD records, be careful what you say in the MLS comments. There are lots of unhappy sellers and buyers who blame the REALTOR for increases in tax value due to MLS comments (“addition not shown in CAD”, or something similar). I would also recommend putting the ball in the seller’s court any time an agent indicates “owner” as the sqft. source. A buyer could interpret that as Gospel Truth and get seriously upset if a subsequent sketch indicates something materially different. No one wants an unhappy seller to claim the REALTOR didn’t tell them about added liability of what they believed to be the size of the house - that is a referral killer. Be truthful, but be careful.

Sharon Taylor on 10/15/2015

Be careful of using SF from previous appraisals if not specifically granted permission.  It is owned by the bank and not intended for this use.  I came across a listing and the buyer was an investor and the size mattered for calculating income.
The new appraisal came in with a significantly small number.  The buyer was very upset and the previous appraiser was contacted and had no record of doing the appraisal.  It got ugly.

Jack R Towers on 10/15/2015

Having measured over 10,000 single family houses over past 35 years as a Certified Appraiser never have I seen a “survey” that reported a Gross Living Area footage. 
Mr.  Dalzell has stated it correctly but I would add another factor;  what about footage on 2nd floor?  You see, a survey does not address that and should never be utilized to base Gross Living Area.  Never!  I am currently building a large sample size study comparing appraiser measured footages vs. appraisal district footages.  My sample size is fairly large exceeding 300 inputs and the numbers are clearly showing tax records for the most part are not accurate, many significantly off from actual Gross Living Area.  Almost all my 2-story inputs are showing larger Gross Living Area footage than tax records.  As both an agent and appraiser I strongly recommend all agents find a way to verify the Gross Living Area footage, be it listing or buyer agent.  Best way at no cost is to see if owner has a previous appraisal.  I am seeing a significant number of sellers who are leaving $$ on the table by settling for the tax record footage which often can be lower than the appraisal.  Also I am hearing lawsuits are increasing over discrepancies in Gross Living Area.  If you can’t verify the footage with confidence best get in touch with a qualified appraiser.  The small cost might very well pay dividends to your seller and make you look VERY professional.  Buyers are now seeing their appraisals prior to closing and discrepancies in footages could, and are causing concern.  See TRID

James DeBerry on 10/15/2015

Rounding often occurs with measurements. No two are exactly alike.  I’ve seen houses that are 200-300[/] less than competing properties where the floor plan was so well laid out that the home actually was more functional than its counterpart. A home either works for a buyer or it doesn’t. Letting buyers know this up front can be really handy when there is a discrepancy between measurements later on. If the difference doesn’t create a value problem, heading off the potential variances by reminding the buyer of why they are choosing a particular home over another can save a deal. Of course it can always be used as a renegotiation tool by the buyer as well.

Tracie Rainey on 10/15/2015

I use the appraisal district number and state the source.  But if the seller has the appraisal from their purchase and they haven’t made any changes that would alter the SQFT I use that number.  Either way make sure to provide the source and I make sure to keep a copy in my file of the information I used.

Laurel Lewis on 10/15/2015

OK, after you find the tax records are off (short) by 400 SF, what should the seller do?  Will he be “back-taxed” on the shortage?

Don Eichler on 10/15/2015

I learned a long time ago not to use the CAD numbers because the county that I lived in for so many years added one half of the square footage of the garage as living area. They accounted for this because most people use the garage to store household goods that do not reflect the purpose of auto storage.  The survey is the best proof of total square feet.

Craig Baker on 10/15/2015

I am a real estate appraiser, and frequently get phone calls from agents with questions regarding square footage, or Gross Living Area (GLA).  Surveys are not really a reliable source, if a survey is the only source available just make sure your source is quoted on the listing.

Appraisal district records are generally more reliable, but are often inaccurate as well.  Modifications to original plans, enclosure of breezeways/patios, garage conversions, additions, as well as measurement or data entry errors can all lead to inaccurate reported GLA.  There are also frequent questions regarding if an area is actually considered as part of the property’s GLA (guest quarters, converted garages, enclosed patios…).

If you or your seller are really in a bind and unsure of the property’s GLA, most appraisers offer measurement services.  A full appraisal is not necessary (unless there are also questions or concerns about the correct list price), and the fee for measuring a house will be significantly less than that of a full appraisal. 

The prior post was correct in stating that appraisers can come up with different measurements, but generally the results should be similar enough that value would not be significantly affected.  For example, 50 sf +/- on a 4,000 sf home would not make much of a difference…  If the property is very large or complex, make sure you work with an appraiser who is experienced with similar types of properties.

Teresa Roberson on 10/15/2015

With my own home, after we did an extensive remodel and additions, the tax records showed our sf to be 3000 ft.  We had Floor Plan Graphics come in and measure and prepare a floor plan and their calculations added an additional 707 sf.  In a market with $250-300/ft, that is a huge amount to be added to the sales price.  Since that experience, as part of my marketing for listings, I have FPG come in and prepare a floor plan and measure and have almost always proven up several hundred more feet, which completely pays for the additional cost of having it done and it is a “source” to be quoted.  That way, neither the seller nor I am the source of the number of sf.

Becky Ellis on 10/15/2015

I agree with Dave Dalzell on 10/09/2015 comment.  Realist is not always agreeable with our Central Appraisal District or the survey.  I always try to use what is on our central appraisal district because it is what is used on most mls listings.

Chris Rosprim on 10/09/2015

I had a listing several years ago and used the SF from the tax district.  The owner contacted me and advised it did NOT reflect the SF accurately.  He was able to provide me with a floor plan to show the changes that were made that deviated from the SF of the original floor plan and it proved a difference of a couple hundred SF and thus changed the value and the price of the home and we used that floor plan as an exhibit to support the different SF value from what the tax district showed.

Dave Dalzell on 10/09/2015

Be very careful about survey measurements.  Surveys usually show the gross concrete slab (not the heated and cooled living area).  This might include porches, patios, carport or garage.  Typically the central appraisal district uses the living area from the original builder plans and any modifications (getting the size listed on the building or modification permits required for construction).  Neither one is probably accurate (size often changes during construction and construction permits are not always updated). 
A better source is the appraisal, since most appraisers actually are required to measure the living area exterior dimensions (not true of “drive-by” appraisals).
In the NTREIS MLS area we have to be very careful because the tax data from “Realist” on NTREIS sometimes uses the gross slab area (like a survey) instead of the Central Appraisal “living area”. This is especially found in the more rural areas of NTREIS. 
Just remember, even any two appraisers measuring the living area may come up with different square footage size numbers.
Best rule, if a buyer is concerned about the living area square footage let them measure themselves or order their own appraisal.


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