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The Risks of Using Square Footage from Tax Records

wav risks using square footage tax recordsEvery agent and broker knows they SHOULD have accurate square footage that they measured themselves or hired a professional for, yet many today still rely on square footage listed in public records without any verification of accuracy.

When preparing a CMA or listing presentation, many agents calculate their suggested selling price based on COMPS that also use tax records to reflect the square footage of the property. Still others have not been trained properly on what should be included and excluded from square footage calculations.

The net effect is that a home can be overpriced or underpriced based on an inaccurate calculation of square footage—which can lead to complaints or even lawsuits.

All of these practices are ill-advised and can get a broker in trouble. Here's an interesting case published on page 9, Volume 49 of the North Carolina Real Estate Commission's Real Estate Bulletin in May 2018 which articulates a complaint made against a broker for inaccurately representing the square footage of a property.

Stephen L. Fussell, Senior Consumer Protection Officer, says in his article entitled Square Footage Errors, A Regulatory Affairs Division Case Study: "Any broker who includes a square footage figure in the MLS or any other form of advertising should exercise great care to accurately determine and report the square footage. A broker should never rely upon tax records, MLS data for previous listings/sales, previous appraisals, blueprints, or the seller's word for square footage."

To make matters worse, there is no nationally recognized standard for measuring square footage. One area might include an unheated enclosed gazebo as square footage, for example, and in another county an unheated enclosed gazebo cannot be counted as living space. How does a consumer REALLY know what they're buying, especially if they are moving from one region to another? Isn't it a licensed real estate agent's responsibility to protect the best interest of consumers? How can consumers be protected effectively when there is no consistent definition of square footage nationally?

It seems like this topic is ripe for NAR or RESO to step in and create a standardized method for measuring square footage nationwide compliant with ANSI standards. There are booksbooks and training classes at housemeasures.comhousemeasures.com to teach REALTORS® how to follow these standards—but to my knowledge, there are no requirements for them to actually confirm the accuracy of the square footage. State associations offer classes on proper measurement techniques to meet local regulations as well.

To view the original article, visit the WAV Group blog.