Square Footage Is King
By Charlie Elliott, Jr., MAI, SRA

Clients and property owners frequently ask questions about appraisals which involve size in one way or another. While the term size could mean lot size, cubic feet, building height, etc., the primary and most critical means of determining the size of a building is to compute the area of finished floor space or finished square footage as it is most frequently referred.

As an appraiser, I can testify that of all of the variables, which make up the value of a property, the number of finished square feet of improved area is one of, if not the most important, factor. Yes, there is location, view and amenities but, in the end, the quantitative number of square feet is king. With everything being the same, it all boils down to “space.” In our society one who owns and controls space has power, more options and the envy of his peers.

Of all of the lawsuits of which I can recall hearing about involving appraisers or sales people, square footage is the subject of the most frequent complaints. In some cases, the appraiser or Realtor counted the garage as finished square footage. In others, the upstairs was smaller because of the sloped ceiling, and the Realtor did not account for this as a reduction in size or, perhaps, someone made a mistake in measuring and computing the finished square footage.

Why do we concern ourselves with square footage? Why has it become the most frequently used medium of conveying size if not the value of a property? The answer is simple; people buy many things when they buy a home, including decor, location and design, but the one thing that becomes the basis for it all is the amount of space. We all want space and as much of it as we can claim. The way we quantify space in the United States is by square feet of area. Please, all of you metric folks out there, we are just talking the United States here.

Many Realtors are unwilling to provide square footage information on their listings for fear of being sued for damages for representing properties to be larger than they really are. This results in a disadvantage not only to prospective purchasers but also to other real estate professionals further down the line. Appraisers and Realtors use closed multiple listing data as comparable sales for evaluating other subjects. If the past sales don’t show accurate square footage the comparables are of limited use. Because of time constraints and issues of access, few appraisers or Realtors measure comparable sales.

Many homebuyers base their offering on price per square foot. After looking at many homes, it is not always easy to discern the property’s size. Therefore, a lot of buyers make notes on the square foot prices of all properties viewed and use the square foot method to determine offering prices. This very simple and effective method is lost when this important data is not available.

Most, if not all, property tax listing data in the local courthouse lists the square footage of property improvements. Tax records are often reported to be wrong, and many real estate professionals will not trust this data for fear of becoming liable for damages resulting from inconsistencies.

How are buildings measured? How is square footage computed? What are the rules on determining square footage? Here are some of the basic rules and techniques:

• A garage, porch, patio, storage area, basement or other unfinished area should be accounted for separately and identified as unfinished.

• A below-grade or partially below-grade finished basement must be accounted for separately, even if it has some windows. It should be identified as a finished basement and the square footage should be shown separately.

• All measurements must be made from the exterior or as outside dimension, including the thickness of the walls. Common walls, such as those found in condominiums and townhouses, are computed using the center of the common wall as opposed to the outside.

• Floor area under sloped ceilings, less than five feet in height, should not be counted as square footage. A-frame houses or finished attics are good examples.

• Open areas two stories in height, such as high ceiling foyers, only get counted once.

• Any floor area, including floor coverings finished walls and ceilings, represented as finished must be completely finished. It must also be heated and cooled and contain electrical wiring and plumbing.

• Most real estate professionals use measuring tapes broken down into tenths of feet rather than inches so that each dimension can be multiplied without the onerous task of conversion after measuring. Our metric friends have an advantage on us here.

• There is no practical substitute for the tried-and-true tape measure, for measuring a building. The large 100-foot plastic tapes with open plastic frames seem to work best. Various electronic devices have been experimented with providing limited success. These devices seem to work best indoors for interior measurements of rooms. In some cases, they are not very accurate even for that.

• Small rectangular buildings are very easy to measure, and computing square footage is usually a no-brainer. Large buildings with many offsets and a lot of architectural interest can be a pain in the buttocks. Many appraisers charge extra to appraise large high profile houses, in part due to the time and effort involved in measuring them and computing the square footage.

How do you know that the measurements are accurate if you are provided with square foot data by an appraiser or Realtor? The answer is simple; you don’t know for sure unless you have an independent verification. Appraisers generally show their work in a drawing providing all outside dimensions. Realtors usually do not; they simply provide a total square foot number. Consequently, the Realtors work is harder to verify than that of the appraiser. If being positive is critical or you suspect erroneous information, about the only way to be certain is through an independent measurement and computation. It is only fair to say that most appraisers and Realtors measure their properties, however, there is always the potential for an honest mistake, and, yes, some so called professionals take their information directly off the tax card with out any measuring or verification.

There are other mediums for comparison when appraising property other than that of the square foot method. The number of bedrooms and baths can be used. The number of acres, stories, garage spaces and other assets may also be a factor. But, in the end “space” matters

If you really want to compare apples to apples use square footage. It is King.

Charlie W. Elliott, Jr., MAI, SRA, is President of ELLIOTT® & Company Appraisers, a national real estate appraisal company. He can be reached at (800) 854-5889 or at charlie@elliottco.com or through the company’s Web site at www.appraisalsanywhere.com.