Square Footage is Key in Accurate Pricing
I have written in the past about the source for square footage that real estate agents use but I thought it would be worth revisiting this topic again. If you are a new agent or didn’t read my past articles I hope you will take the time to check out this post for helpful tips on getting the most accurate square footage information.
I have looked at the source of square footage in MLS listings and found that if the sources that were considered the most accurate were used then the listing would sell closer to its original list price and in a shorter period of time.
You may be asking yourself “why would I care about this in a seller’s market like we have right now?” You may think that with buyers snatching up any and all available homes at above the list price that accurate square footage doesn’t matter but in reality it does.
Unless a buyer has cash they are going to need a mortgage which means that an appraisal will be ordered. If the appraisal shows that the square footage is less than what was shown in the MLS this could result in the appraisal value being lower than the contract price.
As I mentioned previously, the source for square footage information can impact the time it takes to sell a home and the final closed price. The different sources I looked at included tax records, seller, building plans, and appraiser.
Rather than rehash what I already wrote in that post I will let you read it yourself. I think it will provide you with some eye-opening information that will help you to determine square footage from the most reliable sources. Click HERE to read that previous post.
What’s The Actual Source?
Something that I have found lately that may be muddying the waters in the MLS listings is the actual sources of information. Let me explain.
I have found that some agents are listing their source of square footage as the seller when in actuality it is tax records. While seller-provided information is not the most accurate it’s usually better than actual tax records.
Seller-provided information has the potential to be accurate if they get it from an accurate source. Labeling the data source “Seller” is typically used if the source is something other than tax records, building plans, or appraiser.
If the seller gets their square footage information from any of these sources then the original source of the data should be noted. Doing it this way helps the reader of the MLS information gauge the relative accuracy of the information.
My goal in writing this post is to increase the overall accuracy of MLS information. This is especially helpful for appraisers who rely on square footage information to provide reliable and accurate appraisals to lenders to make informed decisions.
The accuracy of this information is also critical to the statistical reports provided by the MLS. These reports have the potential to help provide accurate pricing and appraisal services if the data they rely on is accurate.
I’m sure you have heard of the phrase “garbage in garbage out”. What this means is that if you feed poor quality data into the programs used to produce these reports the final statistical report will yield inaccurate results.
A Plan of Action
So what can you do to help provide the most accurate information to the MLS system? Always strive to use the most accurate square footage data, which appears to be either from the appraiser
or from plans and specifications.
If it turns out that the information you used differs significantly from what the appraiser measured during their appraisal for the mortgage I would suggest changing the square footage information in the MLS listing. If you don’t have direct access to the appraisal report you can ask the buyer or lender to let you know what the square footage is so that you can update the MLS listing information, which will help increase the accuracy of the MLS statistical reports and the data the appraiser will use.
To help you obtain the most accurate square footage information I have compiled a list of past blog posts I have written. If you have any questions that were not answered in these posts contact me and I will do my best to answer them for you.
Conclusion
Do you have any questions about the best source for accurate square footage? If so leave a comment below and as always thanks for reading.
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I was just talking with a group of agents this week about the importance of not measuring. I shared a horror story from an owner about a threat of a lawsuit in light of a perceived square footage discrepancy.
That’s an interesting story, Ryan. Something like that occurred many years ago in the Birmingham market. There was some kind of lawsuit which scared agents from putting any kind of information in the MLS about square footage. Several years ago they changed the rules and now agents must put square footage in and state where they got the info. from. There is still a lot of discrepancies but it is better than nothing.
In our market (North Carolina) square footage is big deal and most agents elect to have their listings measured professionally. We have measured close to 3,500 homes this year already – Not mention all the appraisals we do! Using tax records, builder plans and even other measurements not done by the listing agent are not considered acceptable sources for square footage.
That’s crazy, David. That is an awful lot of house measurements so far! The good thing about that is I’m sure the MLS records are very accurate if they are being done by a qualified individual. This is good news for appraisers whose quality of work is dependent on the data provided by the MLS. Thanks for sharing.