The square footage dilemma. It’s only money, right?
Here’s the situation – A simple one story dwelling, basic ranch design. The tax records on this home show two different square footage numbers. Depending on the number you select, it may change the home’s value, dramatically. If this simple design can have an error of this percentage, just imagine what a 3,000 to 4,000 sqft home might look like. And remember, the average margin of error in the tax records square footage is 403 sqft (based on a 1,000 home study). This is a situation that occurs daily within the real estate and appraisal business, and something that helps to create low appraisals and inaccurate listing prices.
Look at this one example at 3 Ice Ct. in Pinehurst, NC
This section of the tax records displays 1,830 sqft
This section of the tax records displays 2,160 sqft
This section of the tax records displays both numbers, but there’s no obvious reason for the difference. We called the tax department, but they could not explain the difference.
The appraisal for this home shows 1,809 sqft
The appraisal for this same home reveals 1,809 square feet. So, depending on what number an agent selects creating a CMA, or an appraiser selects when using this home as a comparable sale, the price can be changed easily. Let’s look at the difference.
- 1809 sqft – Appraisal
- 1830 sqft – Tax records
- 2160 sqft – Tax records 2
- 1815 sqft – MLS
Appraised Value was $190,000.
$190,000 divided by:
190,000 by 1809 = $105.03
190,000 by 1815 = $104.68
190,000 by 1830 = $103.83
190,000 by 2160 = $87.96
Now, this house will be a comparable sale for the house next door that has (according to the MLS) 1,875 sqft. Let’s use the tax records sqft total and the appraisals sqft totals.
1,875 x $105.03 = $196,931.
1,875 x $87.96 = $164,925.
$196,931 – $164,925 = $32,006.
Over $30,000 difference on a house selling for less than $200,000. Imagine what the difference could be on a $400 – $600,000 home…
At the end of the day, size matters!
These three are within an acceptable margin of error and this amount of difference would not change the home’s value. However, at 2,160 sqft the value would change substantially. these three are within an acceptable margin of error and this amount of difference would not change the home’s value. However, at 2,160 sqft the value would change substantially.
