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Feeling Frustrated!

January 10, 2020 by Leave a Comment

Yesterday, a home in my neighborhood went up for sale.  I know it well.  When it hit the MLS, the agent cited the Square Footage as being “estimated” at 3,700SF.  Trust me.  On it’s biggest day, this is not 3,700SF.  Overnight, the house apparently shrunk.  Because, as of this morning, the house is now “estimated” to be 3,200SF.

While the SF in the MLS is closer to the actual square footage, it’s still not accurate.  Public Records indicate that this house is 2,577SF with an additional 525SF of below grade, finished basement.  If you look at the Assessor’s sketch on the Montgomery County site, the square footage calculates to 2,545SF.  For the sake of argument, let’s agree that the house is roughly 2,545 – 2,580SF.  These calculations are fairly accurate based on what I know of the house.

All real estate professionals have to be more careful.  We owe it to the public and our colleagues.  Estimating and guessing can be so misleading.  Lumping finished basement space into Above-Grade living space is also misleading.  Think about it.  Will your clients pay the same P/SF for the Rec Room in the basement with the drop ceiling and 1970’s paneling as they would for the Above-Grade space?  Probably not.  Take a look at how these numbers breakdown on a Price/SF basis based on a list price of $750,000.  (I know I preach against P/SF but, it’s an easily comparable metric that everyone seems to understand.)

Big difference, huh?  How would you like to be the person who buys what they think is a 3,200SF home for $750,000 (or $238/SF) only to find out that it’s actually 2,580SF at $238/SF?  That would indicate a value of $614,040.

Agents, as we begin 2020, please make it a habit of measuring your listings or having them measured.  Knowing the true Square Footage of your listings matters.  How you report that Square Footage matters.  Make it a business practice of separating Above-Grade living space from Below-Grade living space.

If you have any questions about measuring homes or what should or shouldn’t be included as living space, please feel free to contact me.

The Coyle Group’s team of Philadelphia appraisers are a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing. We also provide property measuring services.  If you need a guest speaker at your next sales meeting, please give us a call. We would welcome to opportunity to speak to your group and field any appraisal related questions you may have. For more information please visit our website at www.TheCoyleGroupLLC.com You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

 

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The Tale of the Tape & Accurate GLA

August 28, 2014 by 8 Comments

The Coyle Group - Living Space GLA Tape - AppraisersDid you ever wonder where the square footage in the Public Records or MLS comes from? Well, it can come from a number of places.

The square footage found in the public records is typically from the county Assessor’s office. This information, while official, can be quite dated and inaccurate, especially with older homes that may have had additions. This data was likely collected at the time of the county’s last reassessment, which in some cases was decades ago. For instance, Montgomery County hasn’t done a reassessment since 1998. Prior to Philadelphia’s recent reassessment the City had not done a countywide reassessment in over 40 years! Even with the 2013 revaluation, the Philadelphia Assessor’s office did not physically measure every property. Many were inspected using aerial photos and measuring software.

The MLS is a different animal. There are basically three sources for square footage that can be cited in the MLS, all of which are subject to inaccuracies. The first as mentioned above is the Assessor’s office. The second is the Listing Agent and the third is the Seller of the house.  Often, Agents and Sellers will ballpark, estimate or even guess the square footage of a house.  Some will lump in finished basement space or enclosed porches as overall square footage. I’ve even seen garages included as living space.

There are also inconsistencies in the methodology used by the three sources. In some of the counties surrounding Philadelphia the square footage listed in the public records will include finished basement space in the Gross Living Area (GLA). Then, under that number they will then report the amount of finished basement space. The correct way to examine these numbers is to back-out the finished basement space from the Total Square Footage and what you’re left with is the more accurate representation of the true GLA. For more information on how finished basements affect the overall GLA read our previous post on the subject Finished Basements & GLA

Certain housing styles like Split Levels and Cape Cods can also add to the confusion of the home’s true square footage. There are actually established standards for measuring homes that are put out by the American National Standards Institute. (For a copy of these guidelines send me an email request)

For agents in particular getting the square footage wrong can be a real problem.  Misrepresentation of a home’s square footage is the most common reason why real estate agents get sued. We had a case last week where the agent assumed the square footage in the public records (1,728SF) was incorrect. She assumed that the addition off the back was not included because “the house just felt bigger”. So she estimated that the addition made the house around 2,000SF and for good measure included another 300SF for the partially finished basement.

The Coyle Group - Living Space GLA - Philadelphia Appraiser

As it turned out, the square footage in the public records was pretty accurate at 1,728SF. After measuring the house our appraiser arrived at 1,724SF. That’s about as close as you’re going to get. The finished area in the basement was closer to 242SF. All in all, the agent misreported the GLA of the house by over 570SF. That’s the equivalent of a 20’ x 28.5’ room. Big difference.

What I would suggest is if you are not going to measure the house yourself hire someone to measure it for you.  Most appraisers will measure a property and provide you with a sketch for a fee. The measurements will be more accurate and will give you something to hang your hat on when listing a property. For more information on the home measuring services provided by The Coyle Group call us at 215-836-5500.

The Coyle Group’s team of Philadelphia appraisers is a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing appraisals in the greater Philadelphia Metro Area.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com

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HELP! My Condo Shrank!

March 6, 2012 by Leave a Comment

Last week, while looking at condo in Center City, the owner showed me a copy of her tax record which indicated that square footage of her unit was 3,155SF.  She was concerned because a previous appraisal stated that the unit was 2,678SF.  In her mind she was sold (and was paying taxes on) a unit that was 3,155SF.

As I measured the unit, I showed her my measurements and made the calculations in front of her.  I came up with 2,698SF, which supported the numbers from the first appraisal.

Then why did the developer, the agent who sold them the unit and the tax records all say that their unit was 3,155SF?  The answer is pretty simple. 

When calculating a unit’s square footage, developers and architects will typically include areas taken from the approximate centers exterior walls to the approximate centers of interior demising walls.  They will also include portions of perimeter walls, ducts, chases, beams and other concealed areas contained within the boundaries of the unit.  This can really add up, especially if the exterior walls are 1’ to 2’ thick like some of the older condo conversions in Philly.  To perpetuate the problem, the tax assessors will typically get the square footage for a unit from the developer or architect’s plans.

Appraisers tend to measure condo units from interior wall to interior wall.  We look at “useable interior living space”.  If you can’t stand on it, it’s generally not included in the Gross Living Area (GLA).  This method is consistent with guidelines published by Fannie Mae.

This can really pose a problem for appraisers when making comparisons to other units.  Often, we have to rely on the public records, condo plans or a developer’s website when researching comparable units.  Who is to say that the GLA reported in the records is representative of the unit’s “useable living space” or if it includes portions of exterior walls?  This is why it is so important for appraisers to know their market, intimately.  It is just as important for the appraiser to clearly explain and reconcile the inconsistencies in GLA; and make an adjustment when necessary and deemed reflective of the market.

This is also something that agents must be aware of, as well.  Make sure you educate your clients about possible discrepancies in reported square footage.  If your client thinks he’s buying a 1,200SF unit, you better be sure that’s what you’re selling.  The number one reason that agents are sued these days is for misrepresenting the size of the property.  If you’re not 100% sure that the square footage is correct, measure it yourself or hire an appraiser to measure it for you.

How would you feel if you paid around $1.5MM for a condo only to realize that its 457SF smaller than you were told?  What’s the big deal you might ask, it’s only 457SF?   Well, that’s a  21′ x 22′ room.   Assuming that at 3,155SF the price per square foot is $475/SF…that missing living space cost them approximately $217,075!   That’s another reason why using price fer square foot (the go-to method for many agents and developers when pricing units) is not a valid technique for valuing condos but, that’s a discussion for another day.

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