Measurements – Easy Pre-Listing fix to Avoid a Potential Future Headache
I have been an appraiser in the Lubbock area for almost 15 years now. One source of problems I have seen prior to a purchase closing is when the sq.ft. advertised on the MLS is different than the actual sq.ft. of the home – how does this happen? More often than not, the Lubbock Central Appraisal District is used as the source for sq.ft.. While they aren’t always wrong, when they are wrong this can cause some issues in more than one way. For my first blog post, I want to talk about how using the wrong sq.ft. on your MLS listing can negatively affect you (whether you know it or not).
While I believe the cost for measurements to be low enough to justify the verification of the sq.ft. for every listing, these are the most common “red flags” I see in the field - times I would suggest definitely having the home measured – any additions, oversized garages, 2 story homes.
Property Measures Out as Expected
This does happen and that is great! You have one less thing to worry about.
Property Being Sold Measures Out to Less Than the Expected Square Footage
This is the one that can cause the most obvious issues. My experience has shown me that price per sq.ft. is heavily relied on to price homes (it is not a valuation technique, but I will save that topic for a later blog post) – if a home is being priced based on 2 numbers, the sq.ft. of the home and a “price per sq.ft.” of a neighborhood, the sq.ft. of the home being accurate would be an important factor. This doesn’t always seem to be the case; the following are a sample of notes taken directly from MLS listings currently active/under contract or sold w/in the past 12 months (as of 11/21/2018 – some **** used as to not indicate a specific listing):
Sq Ft was taken off of *** CAD. If important to you, have measured.
Square footage is not guaranteed so if important please get measured.
Square footage is different from the CAD, square footage is from appraisal when he bought it. If this is important, buyer might measure.
Measure if footage is important.
Sq footage is per tax records and rooms were laser measured. If important to your buyer please measure
Sq.Ft is per seller measurements after home was added on several years ago. If sq ft is important to your buyer, please measure.Agent nor seller guarantee square footage if important to your buyer please measure.Sq.Ft. is wrong in LCAD. Closer to ***** but measure if exact sq footage is important
Unfortunately, I appraise homes that fall victim to this easily avoided piece of misinformation – sq.ft. was wrong in the MLS, home was priced too high based on this misinformation. This leads to having to renegotiate the original terms of the contract – good for the buyer that they are not paying for more sq.ft. than they thought, but bad for a seller that had an expectation set for the size of the check coming back after closing. I saw an example of this recently when the LCAD was used as a source and gave a combined sq.ft. for the home including the above grade Sq.Ft. and the basement – problem was, the home didn’t have a basement, and the above grade was incorrect too. The home actually measured almost 400 sq.ft. smaller than advertised – this isn’t the first time I have seen something like this, and certainly won’t be the last.
Property Measures are Larger than Advertised on the MLS
Great! Right? Depends on which side of the transaction you are on. For the buyer, that is fantastic news. They just bought a house that is actually bigger than they thought without having to renegotiate a higher price (the contract would only be renegotiated when appraised value is below contracted price, not above, as the appraisal only protects the buyer interests due to being in line with lender interests – neither want to overpay).
For the seller? They will probably never know about this, the appraisal is not completed for them – they will go on to their next home never knowing that the home was underpriced with the wrong sq.ft. information, never knowing that they probably left some money on the table.
I recently appraised a home that had the sq.ft. listed per LCAD and the house measured to be about 10% larger. As a result, the appraisal came in about $10,000 higher than the contract. Because the appraisal is done for the lender, who is lending money to the buyer, no one is stopping this transaction to let the seller know they are selling the home too low – the transaction is only stopped if they are selling the house above the appraised value.
What to Do – the Easy Fix
Call me – I have personally measured thousands of homes over the past 15 years. Measurements are typically easy to fit into the schedule, and the time to turn them back over to you very quick. They will not add any significant time to getting your home listed on the MLS and can be done while you ready your home for the listing. Pricing is inexpensive – it is based on the size and complexity of the home being measured. If you are listing soon, or currently listed and would like to verify the sq.ft. of your home that is listed, give me a call for a quote.
Thank you, we'll be in touch!