Square footage differences between the MLS, tax records and the agent's marketing—what to do?

IN THOMASVILLE, GEORGIA REALTORS LIKE TO USE THE WORDS "AS PER OWNER" WHEN IT COMES TO SQUARE FOOTAGE......

Tuesday, May 25, 2010 at 7:52AM

If you've been looking into real estate for anytime, or have listed your own home recently, I'm sure you've noticed many agents including "BTV" within their MLS descriptions and on their marketing materials. BTV stands for Buyer to Verify. This language is a disclaimer from the agent and seller telling the buyer that it's his or her responsibility to make sure the property matches it's description.
Many agents haven't noticed that the South Bay Board's outbound MLS emails include the following text as part of their footer:
Information is believed to be accurate, but should not be relied upon without verification. Accuracy of square footage, lot size and other information is not guaranteed.
This is really important to you as a buyer because you want your information to be accurate. The most common discrepencies we see are:

1. Square footage differences between the tax records, MLS, previous MLS listings and builder data
2. Bedroom count differences between the tax records, MLS, previous MLS listings and builder data

For today's entry, we're going to focus on Square Footage discrepancies. On a large home (over 3,000 sqft.) a few hundred square foot difference between tax records and the MLS entry probably won't make or break your deal. However, on a small 1,000 square foot home, 300 square feet represents over 30% of the property's living space.
What's counted in a home's square-footage?
Only the heated living space is included. So no, to those who asked, the garage is not included in a home's square footage.
Why are there different numbers between public and private records?
For single family homes, especially an older property, the difference between public records and tax records is explained by property additions, remodels and modifications over the years. For example, the tax records may show a home is 2 bedrooms and 1,200 square feet. But, the home is listed today as a 5 bedroom with 2,800 square feet of living space. Explanation: possibly the addition of a master suite or a second floor, plus a little push here and there.
Townhomes are a little harder to explain because they really don't change in size over time. Typically, a decrepincy is introduced at some point during the property's first sale. The most common discrepancy we see is:

• builder and seller data is larger than the official tax records

Within the MLS, the seller and agent will disclose where they are getting their numbers:

1. builder data
2. seller stated
3. estimated
4. taped (someone measured the home
5. tax assessors data

It is your job to verify and feel comfortable with this information as you move forward in the sale.
What happens during the bank appraisal?
The appraiser always starts with the public, tax information first and then builds an accurate square footage number from there. Most appraisers  will tape (measure) the house as part of their assignment and compare their results to the tax records. If there is a large discrepancy, and it's a relative number as noted earlier, the buyer will have the option to:

• cancel their purchase
• regenerate the price based on the new data
• move forward with their purchase

For those who use square footage numbers to calculate a home's value, even 200 feet can translate in to huge dollars. For example, a 1,500 square foot home selling for a cool $1,000,000 would have a square footage cost of $666. Using creative math, some buyers might see a 200 square foot discrepancy as being worth over $133,000 in their favor. In other words, the homes value should be adjusted to something in the $870,000 range.
The preceding example clearly illustrates why square footage numbers are only a data point when determining a home's listing price, and not the only factor considered.
Once the appraiser has finished their report, which includes comparing the target home to at least three other like properties in the area, they will establish one of the following:

• the home has appraised at the selling price
• they will give the home a dollar value appraisal, which may be higher, the same as, or lower than the selling price
• they will establish that the home has not appraised

How a home is measured
The American National Standards Institute (ANSI) includes the following directives regarding how a home's square footage should be measured:

• Measurements of the exterior face of outside walls
• Measure to the nearest inch or tenth of an inch and report to the nearest whole square foot
• include only finished, heated areas of a home
• Ceilings must be at least 7 feet hight to be included in the finished square footage area (except under stairs, beams or sloping roofs
• Never include a garage as part of the finished square footage
• Never include additional apartments or other heated, finished space unless they are connected to the main house by a finished staircase or hallway

What should you do?
If a discrepancy shows up in your home purchase, don't immediately assume that the seller is trying to cheat you. Do you research and try to understand where and when the erroneous numbers were introduced. And more importantly, decide if the difference really changes your opinion about the property.

http://www.blakeanddiana.com/home/2010/5/25/square-footage-differences-between-the-mls-tax-records-and-t.html