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Legal IssuesSquare footage: What buyer sees, buyer gets?
There have been a number of calls to the Hotline recently that involve measurement problems.
Suits are filed when the “actual” square footage fails to conform to the measurements published on the MLS. In my experience, most suits are resolved against the purchaser for a variety of reasons:
1. The Agreement of Sale, unless modified, places the risk of square footage discrepancies on the buyer.
2. Despite what numbers were posted, the buyer actually saw the property and purchased what he saw.
3. Standards for measurements vary.
There are Fannie Mae guidelines to measuring gross living area and gross building area, as well as different approaches taken by the American National Standard Institute (ANSI) and others. No wonder there can be confusion.
The lesson here is that buyer agents must underscore that their clients are acquiring what they see and not necessarily what they read, at least in terms of measurement. An alternative approach is to modify the agreement so that a seller warrants specific gross building or gross living area, in which case the standards for measurement should be included in the agreement.
The documents we use are replete with reminders that buyer agents tend to ignore. On the back of page two of the agreement is a statement indicating that representations of square footage are estimates only and the bottom of each page of the MLS indicates that the information is not guaranteed. These reminders are here for a purpose. Don’t fall victim to a matter of size.
I’d like to hear from you. What do you do to avoid these problems?
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Jim Goldsmith, Esq. is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline. |
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Having practiced real estate for 40 years, the custom in our area and the MLS published definition and demonstration on how to measure a house is by using the exterior dimensions. That is how a builder charges for ALL the space they build. Our company also uses the sq. ft. dimensions, as does our MLS (FBS) to show the relationship of list price to sold price per square foot. How else do you come up with a value of the house if you do not know size? We also use the Building Residual Technique for our Comparable Market Analysis which removes the land value from the total sale price, making adjustments for all the majaor differences, including square feet, then adjusting for the location (land value) and arriving at a price. Square footage is critical, in my opinion to arrive at a fair estimate of value.
Always a touchy subject! Our MLS breaks down above grade finished/unfinished and below grade finished/unfinished and then total sq ft. Some agents still get that wrong. In NJ, for example they do not allow sq ft on their listings! Someone probably was sued!
A good idea to carry a tape measure along with your falsh light just to be sure! Then they can measure the room and see if their king size bed would fit
Thanks for the great replies. Jim
The square footage is not something that is hidden. Any buyer who cares enough about square footage can measure for themselves and dispute the listed nunbers if there is a dicrepency. I find rarely is the MLS listing sheet accurate. It’s just a guidline.
Mark Dolph ASHI# 207636
Certified Home Inspector
Moscow, PA
570-842-1200
As a Listing Agent I always include room measurements (rounded down) as many buyers simply need to have some idea as to whether their furniture will fit. When inventory is high, including measurements is even more important to promoting your listings. I still get feedback that the rooms are too small.
Many listing agents do NOT include measurements and, while I think it is attributable to simple laziness or the way they were taught, they use the “avoiding liability excuse”. So much for protecting and promoting the interests of their sellers.
As a Buyer’s Agent, I agree that my clients buy what they are seeing. The presence of room measurements in the MLS may encourage them to visit a house but many will actually measure specific rooms themselves as the locations of doors and windows realy impact what are actually generic length and width numbers.
Also, great presentation at Triple Play on Thursday. I always enjoy your insight and your humor.
Thank you,
Andrew
I usually use the assessor’s square footage unless the seller insists on using something else. Trend MLS denotes where the figure came from. I do make exceptions to this. A listing I am currently working on has 3904 sf. The seller built the home and has the plans. The assessor has listed the square footage as 5000 sf! It is a 1 1/2 story home – looks like the assessor measured the footprint of the first floor and doubled it. Also, if there is finished basement space, I like to keep that in the description.
I rarely document overall square footage, unless from a prior appraisal and also “market less and sell more”…Meaning, if a room measures 9’11″ x 12’9″, then the measurement in the MLS will be 9′ x 12′. I believe this helps to protect the Seller and listing agent.
I think that square footage is pretty much always over stated. I was always under the impression that if you want a true square footage of a property you have to measure the interior walls length x the width yourself. If buyer’s agents do that, they will in fact notice that the square footage is NEVER the same as what’s stated on the MLS. Builders give you the square footage measured from outside the exterior walls of the property, so it’s not true living space!
Jim…great piece. I think you hit on a great point. The NOTICES thatare rarely explained to the buyers and basically not even understood by most agents! If you surveyed many agents, you would probably find most have no idea what they say or mean. I find most brokerages more concerned with getting deals on the board and have cut out most education of agreements of sales in their training programs or skim over it so quickly the agents just feel they are non issues and forget about it. In 20 years of an unblemished record, I can tell you nothing has ever come back to haunt me since I make it a point to understand and explain these issues before my clients sign. No “I’ll email you the contracts so you can sign and return” for my clients unless they are experieinced buyers!
I tell all my buyers from day 1 to ignore the square footages noted in the MLS. Particularly if they have commercial real estate experience (where square footages are the key ingredient in pricing) or if they are from out of the country is this an issue. Recently I had buyers from Denmark who kept insisting the square footages were wrong and compared the appraiser’s measurement to the MLS despite what I had told htem. I had to resurrect some old emails to show them that I had mentioned this to them early on. Now I have it on a checklist to do in writing.
Jim First of all I advise my students to measure every house–and using a ‘low tech’ model like a 200′ tape works. Then, when the buyer is sure he wants it–measure it again–with the buyer helping you. A buyer may want to measure interior space only (unlike Fannie Mae guidelines, which consider exterior measurements of all areas above grade). It doesn’t really matter HOW you measure it with the buyer, because he is participating and really knows then what he is getting.