Author: Bill Lewis, Vice President and Manager of Alain Pinel Realtors Los Altos
Have you ever wondered how big your house is? For many, size matters – and can often be a point of distinction when evaluating a property for purchase. Yet for something important, there seems to be a lot of questions – and questions can lead to conflict. Naturally, when buyers find out their recently purchased home is smaller than they believed, they want to be reimbursed for the difference. I recently saw a buyer who was seeking over $100,000 from the seller! However, it is often not that straightforward and only through continued education will these situations be reduced.
So who determines size and how is it measured? When a property is listed on the MLS, the square footage is auto-populated from the county records. These records are often inaccurate – as changes during construction or remodels have altered square footage without the record necessarily being updated. Yet, because they are the only official record for reference, they are often used in advertising (with a caveat about their validity and that any conflicting information and their sources will be disclosed by the seller). Other home measurements may originate from sellers, the original builder’s plans, the architect of a remodel, an appraiser when a property was refinanced, etc. The fact is that there may be many conflicting measurements from many sources. The most commonly accepted source is from the appraiser, a licensed professional who is trained to determine value, and is the sole source in determining the value of the property for the lender.
Many people often use square footage as the only criteria to establishing value when purchasing a property. Price per square foot is a common measurement used when looking at comparable properties and their selling price. However, there are many other factors that determine value, especially at the high-end. The quality of the interior finishes, the desirable lot, the appealing floor plan, the location and school district are just a few of the factors that also affect value. Many people’s criteria for determining value may differ and may be more subjective. For sellers, when determining a listing price, a knowledgeable agent is crucial as they have toured all recently sold properties and have a better reference about the pros and cons of comparable properties beyond size.
When buying a home, sometimes disclosures and warnings about potential discrepancies are not thoroughly read or understood by buyers as they get lost in the purchase contract. If a buyer finds out their home is smaller than advertised – is it then “worth” less? Not necessarily. In the example in which the buyer sought $100,000 dollars – the advertised square footage was based on the original architect’s plans. During construction, some changes were made that reduced the square footage and was not reflected in the listing. When they sought compensation from the seller, the appraisal for their loan actually incorporated the lesser square footage and found the property was valued accordingly – thus eliminating any claims that the property was worth less. An appraiser will always do his or her own assessment on square footage and not just go off the advertised size.
An experienced agent can and should ensure that a buyer understand that discrepancies may occur regarding square footage, go over all disclosures, and set realistic expectations regarding size. There are many reasons we are drawn to homes – sometimes emotional and often unquantifiable reasons. In the unfortunate event there is a surprise regarding size, it is important to remember that size is not everything – it still is the house that you paid for.
About Author:Bill Lewis currently serves as Vice President and Manager of the Alain Pinel Realtors Los Altos which has consistently been one of the top producing offices within the company. Bill has over 24 years leading and managing real estate offices in the luxury and upper-end “Mid Peninsula” market. For more information call Alain Pinel Realtors Los Altos at 650-703-1602 or email at firstname.lastname@example.org.