Home Measurement Services
How can incorrect square footage affect the sale price? If the square footage is incorrect, it can create a gap between a contract price and the appraised value. This gap can complicate the sale of the home.
As of April 1, 2022, Fannie Mae now requires appraisers to measure properties in compliance with the American National Standards Institute (ANSI Z765 – 2021) standard for measurement and calculation of residential property. As of November 2, 2023, Freddie Mac will also adopt this requirement for all one-unit properties. FHA has not yet adopted this requirement, however likely will.
Why is this important to know? One main criteria for pricing a home is square footage. Most homes are listed for sale based on the square footage reported by the County Property Appraiser (CPA). The CPA’s measurement practices are not required to conform with ANSI measurement standards.
The square footage of most properties reported by the CPA is nearly the same as ANSI compliant field measurements. However, in our observation of homes of all sizes, it is not uncommon to have an error of 2% – 10% with extreme cases in excess of 20%.
How can incorrect square footage affect the sale price? If the square footage is incorrect, it can create a gap between a contract price and the appraised value. This gap can complicate the sale of the home. The following is a simplistic example for illustration purposes:
A 2,500-sf home is listed for sale at $850,000, or $340 per square foot.
ANSI measurements result in the home having 2,375 square feet. This is a difference of 125 square feet, or 5%.
The home goes under contract with a full price offer at $340 per square foot. The 125 square foot difference creates a gap of $42,500 (125 sf x $340 per sf). This suggests that based on the correct square footage the appropriate contract price should have been closer to $800,000 ($850,000 – $42,500 = $807,500).
The question then becomes what to do about this gap. Common solutions are to: lower the contract price, have the buyer pay out of pocket for the difference, the Realtor(s) can reduce their commission, or cancel the sale. In any of these scenarios, at a minimum people walk away from the transaction dissatisfied.
Is this service right for you? As we stated above, the square footage reported by the CPA of most homes is close enough to ANSI measurements to not have a significant effect on value. If you are unsure about a complex floor plan or are just unsure about a home, our measurement service can prevent problems and liability for listings with incorrect living area.
We will measure the home to ANSI standards and provide you with a sketch and dimension list of the home for MLS and marketing purposes. You will be able to list any home with confidence, knowing that the square footage is accurate.
How much does this service cost? Pricing is based on complexity and location. The majority of homes fall into the category of the base price of $150. More complex designs and extended-distance properties can be quoted prior to setting an appointment. With the amount of positive feedback we have received from this service we are offering repeat clients discount pricing.
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Stephen D. Ihrig II, SRA is principal of SDI Appraisal, specializing in the valuation of residential real estate. Steve has been providing appraisal and consulting services since 2003. Currently a Certified Residential Appraiser in the State of Florida, Steve was awarded the SRA designation from the Appraisal Institute.
In today’s ever-changing real estate market, utilize only the best and most qualified individuals to perform your residential appraisals. An accurate value supported by data and analysis, that reflects market trends, can hold up in any court of law, is considered a high-quality report by any lender’s underwriting system, and meets all USPAP (Uniform Standards of Professional Appraisal Practice) standards should be your primary objective when retaining a real estate appraiser.