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?
If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.