Simple Square Footage Errors Can Mean Big Money
210 Stornoway Dr. – Southern Pines, NC 28387 MLS #145845
Sold Data – Closed – VA – 05/15/2012
Sold Price – $314,000 – Sold Heated Finished SqFt = 2,892
This closed sale will be used as a “comp” for many other homes in the future. Every time this home is used in a CMA or an appraisal, depending on the square footage total the agent or appraiser chooses to use, the value they determine may be greatly influenced. While many professionals use the sqft reported in MLS, many choose to use the sqft data reported in tax records for every property. They argue it is more consistent to use tax records, where at least all the properties are measured by the same method. And, in areas that only report a range of sqft, tax records are the only choice, even though the records are notoriously inaccurate. We hear all about inaccurate appraisals, but rarely hear about inaccurate square footage details used from public records, and the influence that data has on appraised values. The square footage Pandora’s Box stays hidden under the bed in hopes consumers will not make square footage an issue.
This one error can mean a $60,000+ difference in someone’s home value.
It can cause inaccurate list prices and appraisals.
MLS sqft reported as 2,892
Sales Price of $314,000.
The tax records reflect 2,310 square feet.
Or a 582 sqft difference. What does this difference do to the value?
$314,000 divided by 2,892 sqft = $108.58 per-square-foot
$314,000 divided by 2,310 sqft = $135.93 per-square-foot
If the next house that comes up for sale in this neighborhood is 2,400 sqft.
2,400 x 108.58 = $260,592.
2,400 x 135.93 = $326,232. So, what is a fair listing price?
$65,640 Difference… what could happen when this house is appraised in the future? And, will they call it an inaccurate appraisal? Dies the egg or the chicken first?
If an agent or appraiser uses the square footage from MLS, or if they use the sqft details from the local tax department, there is a huge difference in value. There is no requirement for agents or appraisers to use MLS or tax records for their square footage details. It is optional.
