subject: Understand How A Home Is Valued [print this page] This tight economy creates a situation where we all have to use creativity, and that includes homeowners who want to sell a home. As we all know, necessity is often the mother of invention, and in the present real estate market that time-worn phrase still has a lot of truth in it. Some motivated sellers and their agents have devised a plan to justify the selling price of listed houses by inflating the square footage reported on properties in order to make them appear larger and more valuable.
Of course I'm not pointing a finger at anyone in particular because the basic problem stems from the fact that lenders work with a dollars-per-square-foot formula, which is why a house with more square footage is considered more valuable than a similar but smaller house. Space equals dollars of construction cost and those dollars add cost and therefore value to a house. In this real estate space race some sellers are seriously considering selling a house for cash so they can avoid the growing number of problems associated with marketing their house to capture buyers' attention, and then having to wait so long to close the sale due to financing issues. It can really become a hassle.
Most people who have purchased a house know that it's a common practice for agents to rely on county assessors' square footage measurements on listing forms. It's easy and it's verifiable, public knowledge, decreasing an agent's liability for errors. Personal liability is something agents always want to avoid, so they generally use the county's measurements, even knowing the numbers may be inaccurate. The best way to say it is that the county's figures are sufficient for tax assessment purposes, but not for the mortgage lending process. That's really the heart of the problem and it's the reason more and more sellers are thinking about selling a house for cash to a real estate investor. Relying on county assessor's measurements in the past worked out pretty well, but that is no longer the case.
So, who should be taking the measurements and what approach should that person use? Counties normally take exterior measurements and appraisers usually take interior measurements, resulting in a significant difference in the size of an average house, and especially in a large house. Exterior plus interior walls can delete over a foot of useable space in each dimension, so it's easy to see how the use of exterior measurements exaggerates the actual, useable floor space inside a house. To be safe, hire an appraiser to take measurements if you decide to list your house on the multiple listing service instead of selling a house for cash on your own.
