If you’re not an appraiser, and you’re trying to figure out the value of a home, chances are good that you use a price per square foot metric. I’ve written about this topic in the past. That way of measuring the market can lead to an opinion of value that is in the ballpark of a home’s market value. However, oftentimes, it does not.
If someone wants to use this method for pricing a home, there is one piece of information that is incredibly important to get right. It is the square footage! Of course, that goes without saying. Often, homeowners, agents, and others base their value opinions on square footage obtained from public records, usually because it’s free and, in most areas, available to the public. Let’s talk about why relying on square footage reported in public records, can lead to trouble.
PUBLIC RECORD’S SQUARE FOOTAGE
There is a misconception that a home’s square footage, reported by the county auditor (assessor), is somehow a certified number. Last year, I appraised a home for a homeowner. My measurements reflected the home as having less square footage than the county auditor reflected. The homeowner watched me measure their home. When they received their report, they said that my measurements were off because they were lower than what the county auditor reported. They said that the county auditor’s recorded square footage is the “certified” square footage. This is simply not true. They told me that they were going to check my measurements with their own tape measure. I encouraged them to do so and to call me if I made a mistake. They never called.
If you call your local county auditor and ask them if they certify their reported home square footage to be accurate, I think you’ll be surprised at what they say. There are several reasons why their square footage can be off. For one thing, the assessor rarely if ever goes inside homes to measure them. So, they have no idea of what the interior layout is like. There may be areas of the second floor that are open to the first floor, which is not considered to be square footage. However, often public records reflect these areas as having floors.
Usually, assessors have employees, or they hire companies, to blitz through a neighborhood and take some rough measurements of homes. The purpose is to ensure that they are taxing the homeowner fairly. Do you remember the last time you saw someone from the assessor’s office measuring your home?
A couple of years ago, I appraised a home that had been reported as having around twenty-eight hundred square feet of heated above ground square footage. I measured the home to have just over four thousand square feet of finished above grade square footage. Why the huge disparity?
The homeowner admitted that decades ago, the auditor has going door to door and asking homeowners what they thought the size of their home was. The homeowners told them around twenty-eight hundred square feet because they didn’t want to pay taxes on a bigger place. Believe it or not, that’s what the auditor used, and it remains that way to this day. Of course, I based my opinion of value upon what I measured.
A FEW MORE REAL-WORLD EXAMPLES
Let me share a few more examples with you, that will demonstrate why you should have your home measured before you sell it. Earlier in the year, I appraised a home to have a market value that was twenty-eight thousand dollars ($28,000) higher than the contract price. Why? It was because the home was just over three hundred square feet larger than public records reflected. Contrary to popular belief, appraisers do not magically appraise homes at their contract price simply to rubber-stamp a sales price. This is a good example. If the agent had measured the home or had it measured, they could have sold the home for tens of thousands of dollars more. The seller will probably never know. And it’s a good thing! If I was selling my home and found out that I could have sold it for $28,000 more than it did, I would not be a happy camper.
Here’s another example. Last year, I appraised a home to have a market value that was about twenty thousand less than its contract price. The reason? The home had a little over five hundred square feet less square footage than the county auditor reported. Several of the measurements of the walls were incorrect on both the first and second floors. There was such a larger difference that I went out to the property a second time to remeasure the home to make sure that I had not made a mistake. I had not. If the home’s square footage was really what was reported in public records, the market value of the home would have been in the ballpark of the contract price. But, sadly, in this case, it was not.
Here is the county auditor’s sketch.
Here are my measurements.
How about one more example? I appraised a home last year, for a refinance. The home was just over seven hundred square feet smaller than the public records reflected. The reason? Part of the reason is that the county auditor included some large areas of the second floor, that are open to the first floor, as being square footage, when they were open areas that are not included in the usable square footage. If it doesn’t have a floor to walk on, it’s not considered in the living area square footage. Of course, the reason the county auditor didn’t catch this, is because they do not go inside homes when they measure them. So, they have no idea of the layout of the interior.
Here is the county auditor’s sketch.
Here are my measurements.
You can see why there is such a large difference.
AVOID FUTURE PROBLEMS BY HAVING YOUR HOME MEASURED
If you’re getting ready to sell your home, ask your agent to measure your home instead of relying on public records. If they do not have the know-how to measure your home, you can hire an appraiser to measure your home to ensure that you are pricing your home accurately. Spending a relatively small amount of money to have your home measured may save you thousands of dollars.
It’s always better to know upfront how large your home is. By the way, the same holds true if you’re buying a home. Make sure that you know the accurate square footage before you buy it. As the examples I shared with you demonstrate, not being educated on what your home’s square footage really is can cost you tens of thousands of dollars. Appraisers see this all the time.
Information in public records is usually free. That is likely the reason why many use it. But “free” often comes with a price, as with many “free” things in life.
Interestingly, the Uniform Standards for Professional Appraisal Practice (USPAP) doesn’t require that a measuring standard be adopted by the appraiser. While that’s the case, the appraiser must still ensure that they are measuring the home they are appraising accurately. I use the ANSI Z765-2021 standards, which many real estate professionals, including many appraisers, use for measuring residential properties. Some states and lenders require appraisers to follow ANSI standards.
Having a standard to follow will help to ensure accuracy and consistency in measuring. I think that whether we are a homeowner, real estate agent, or appraiser if we take measuring a home seriously, it will go a long way towards more accurate home prices in the future!
If you would like to be trained on how to measure a home, Appraiser eLearning has a fantastic online class that will train you on how to measure a home using ANSI standards. I took the class several months ago and loved it! While I have been using ANSI standards for years, I learned some new things in the class. (Click here for a link to their class) If you’re a real estate professional, I highly recommend educating yourself on how to measure a home. It may save you some grief and may make you some money in the process.
- photos from upsplash
How about a little robot dancing to start the weekend off right!
And finally, a little more human ingenuity…
Have a great weekend!
If you enjoy listening to podcasts, check my new podcast out. I hope you enjoy it! You can find me on Apple Podcast, iHeart Radio, Spotify, Google Play Music, Sound Cloud, Radio.com, RadioPublic, Deezer, Breaker, Stitcher as well as other feeds.
You can also listen right here at Cleveland Appraisal Blog!
If you are interested in stats, and nothing but the stats, for neighborhoods in Northeast Ohio, check out my other podcast. In it, I provide short episodes that provide you with stats on median sales prices, marketing times, housing inventory and other related stats, on specific neighborhoods in Northeast Ohio. You can find me on Apple Podcast, Spotify, Google Play Music, Breaker, Overcast, Pocket Casts, Radio Public or you can listen right here at the Cleveland Appraisal Blog.
I am a member of the National Association of Appraisers. If you’re an appraiser, and you’re looking to join an appraisal organization, please check them out. The NAA is made up of fantastic appraisers from across the country who are working hard to keep their fellow appraisers up to date on what’s happening.
Here are some links to other articles I’ve enjoyed recently! I hope you will also…
Housing Market Baggage On The Conveyor Belt Of Life – Housing Notes by Jonathan Miller
Unrealistic sellers & my favorite housing analogy – Sacramento Appraisal Blog
Is My Home Appraisal Confidential? – Birmingham Appraisal Blog
2021 Appraiser Fee Survey – APPRAISAL TODAY
Unanswered Questions – Part 1 – Brent Bowen Appraisal Buzz
Content is King! – Building A Six-Figure Business With Content! – The Real Value Podcast with Blaine Feyen
Content is King – Part 2 – The Real Value Podcast with Blaine Feyen