Last week I gave some tips on how to challenge a low appraisal, and today I’d like to point out something very obvious you ought to pay attention to in an appraisal report. If there is a big difference in square footage between the appraisal and official records (tax, assessor, county, city), it’s important to know why there is a difference, because it could hurt your wallet.
In the example below, an investor client hired me to review an appraisal on one of their recent flipped properties in Sacramento. One of the very first things I noticed was the appraiser measured 1087 square feet, but Tax Records said 1207. Since the appraiser adjusted by about $50 per square foot, it looked like this could possibly make a $5,000 difference in the report. Who was right in this case? After my client hired me to accurately measure the house, the actual GLA (gross living area) was 1207. You can see the appraiser measured the western wall at 38 feet, but it was actually 45 feet. The original appraiser ended up fixing the error and then adjusted the value up by $5,000.
There was obviously an error in the example above, but in other cases, why is there a difference between actual living area and what official records say?
- Builder was wrong: Official records could have been wrong from the beginning if the builder reported an inaccurate GLA for that model.
- Change of building plans: Sometimes building plans change, but the adapted square footage is not reported to the county, so the local authorities only have on file what was originally planned.
- No permits: The house may have been added on to without permits.
- Permit not recorded: The addition was done with permits, but for whatever reason the additional square footage was not recorded.
- Appraiser error: The appraiser made an error.
- Including the wrong stuff: Maybe official records mistakenly includes an enclosed patio, sun room, garage or something else that really shouldn’t be GLA.
- The 5 foot rule: There is a difference between the footprint of the house and actual square footage in cases with slanted ceilings with short walls (especially an A-frame house). It’s always important to take into consideration the “5 foot rule” for calculating square footage.
- Shoddy workmanship: Maybe there is a legal addition, but the workmanship is really not up to par for consideration as GLA because it doesn’t meet standards for GLA.
What other reasons might there be a difference in square footage between official records and reality?
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Great post Ryan. In our area county records are pretty accurate for one story homes on crawlspace or slab, but when you get into 1.5 story homes that’s when inaccuracies occur. In addition, the living area in the basement is sometimes wrong for many of the reasons you listed above. Sometimes lowering your taxes is as easy as verifying the accuracy of your square footage.
Thanks, Tom. It’s good to hear records are fairly accurate in your area. Our records are pretty good too, though it does vary from county to county since not every county publishes their records online. Sometimes it’s hard to tell how big a house is going to be too because sometimes Tax Records only lists a Gross Building Area, which may or may not include other portions that are not GLA.
I too have found tax records wrong and usually it appears that it is computer user error from the assessor’s office. Another error has been with new homes where the builder offers choices of a bonus room or an office versus a bedroom and yet the tax records show an error in the number of bedrooms. Happens quite a bit.
In fact, right now I have a home buyer in Roseville where the tax records say 5 bedrooms and the listing agent unfortunately did not correct the listing since there are only 3 bedrooms and a large bonus room that could have possibly been 2 additional bedrooms had the homeowner made that choice.
You are so right, Gena. Thanks for the comment. I see records off quite a bit from builders. Sometimes an optional 300 square feet was planned too, but it didn’t end up happening. Usually the error seems to be with bed count as you mentioned, but sometimes it’s even with GLA.
Very good article…as having been on both sides of the fence I can tell you there is just plenty of error to go around, both privately and publicly. Many times Assessors do not get interior access…and therefore use a formula to estimate second story footage. In our office, we will gladly remeasure any house upon request without a formal appeal if the taxpayer feels we are in error. It is important to help your local government have these records as accurate as possible, even if the market value/taxable value of your home remains unchanged. Many private companies “ping” off official records for things such as internet searches, (the awful) home price estimators, and FSBO searches. If you have a 4 bedroom house that is accidentally listed as 3…if you go to sell your house, potential 4BR buyers will not know your home is available.
This is one place where appraisers could do their clients a very valuable service by faxing a copy of a sketch to the office to make necessary adjustments if the customer so desires you to do so.(USPAP and confidentiality notwithstanding) At the very least, inform the homeowner of the discrepancy, so that they may remedy it if they so choose.
Thanks for your comment, Lawrence. I appreciate your insight from a guy who has had his feet in both worlds. I am really glad to hear your office offers a free service for measurement. It sure can make a difference if measurements are innacurate. Home owners would be wise to make sure their square footage is correct (of course only if the Assessor lists it too high, right?) 🙂 You are very right about buyers not knowing about the house since MLS tends to important Tax Records and sometimes agents do not manually make the correct change on the listing.
LOL, only if it is high…truth is, while most assessor’s offices manipulate a cost based model to estimate a market value of a home…do not think that every square foot is worth the same dollars. If every house in your subdivision sells between 100 and 110K, regardless of correcting square footage errors, we will not be obligated to drop the value below those neighborhood thresholds. It has to make sense before we change the valuation.
Thanks for the inside scoop Lawrence. 🙂 I appraised a house in the past two weeks where they had about 230 extra square feet that was not accounted for in Tax Records. Despite getting a permit and doing a great job on the adition, it just never recorded (bonus for the home owner I guess in terms of property taxes, but less of a bonus for resale). I would think the extra space would make a difference in the assesed value, but maybe not in the eyes of the Assessor. Of course the house was about 2800 square feet, so the overall addition was not even 10%.
I think those of us who list homes, should really be thorough and double check our details, before hitting that save & submit button!
Well said, Lori. Knowing the right details at the beginning sounds like a good way to start too. Keep up the great work.
When we bought our house, it was listed at 2,047 sq.ft. When we refinance our home, the assessor reported at 1982 sq. ft. When we checked with our recorder’s office, their records listed at 1,982 sq. ft. also.
We were upset to think that we purchased a lower sq. ft. home than what we were led to believe by the builders. It is also sad to think that we paid for lower square footage home which must have been at a lower cost? Any recourse for home buyers like us who felt that we were mislead by the builders?
Hi Rose. Thanks for reaching out. It’s hard to speak too much to your situation since I may or may not know your area. The truth is in my area in Sacramento the Assessor is not always correct. Sometimes the builder’s square footage is correct, but in other cases the builder might say one thing, but then the square footage is really different for whatever reason (maybe the floorplan changed after the square footage was given to the Assessor, for instance). In most cases when a home is built the builder turns in the square footage to the Assessor. In other areas of course the Assessor might come out and measure the home. It really depends on the area. I would be curious to see what an appraiser or other professional might measure your house as. That might help shed light on who is correct – the builder or the Assessor. Keep in mind there is always a reasonable margin of error, so if an appraiser measures 2060 or 2030, that’s pretty close to what the builder says.
As far as recourse goes, that is a legal question, so I’ll refrain from getting into that. However, for what it’s worth you can do some research and consider what buyers are paying for more square footage in your neighborhood. In other words, how much is that loss of 65 sq ft really worth in the market? I suppose this all comes down to whether that amount was high enough to pursue something legal (if that were even possible (I’m not a lawyer)). Even if you were wronged from the beginning, it is a numbers game because you might end up paying way more for litigation than the actual value the extra space contributes. Hope that helps in a small way.
Best wishes.