“What’s the square footage?”…”What’s the price per square foot?”…these are two of the most common questions asked by clients.
The majority of agents have no idea how to measure a home as an appraiser does. This often results is misleading listing information, annoyed clients and possibly a lost sale for the seller. It can also be problematic during the appraisal process.
Real estate agents in Georgia are strongly cautioned about providing the square footage (living area) of homes. The reason revolves around the inability of many agents to be objective; may tend to embellish the facts thinking that will lead to more activity. Some don’t know any better and include areas in that figure that shouldn’t be. Others may rely on tax records or owner records, often incorrect. Of course, there are some agents that simply don’t know how to measure a home according to American National Standards Institute, Inc. (ANSI) accepted standards.
Many agents tell sellers what they want to hear to solicit listings. Accuracy in list price, descriptions, disclosure items, and many other potential legal pitfalls are critical, especially with so much transparency in real estate. Many agents appear not to care or simply lack the knowledge to properly advise their clients. That can result in buyers avoiding it or being disappointed when they see it; bad results either way. In a few cases, it resulted in law suits against agents.
The best way to measure a home is to follow the same process an appraiser will. The best resource for anyone interested in understanding the process will benefit from visiting the North Carolina Real Estate Commission web site. Below are the key points on how to measure and consider areas – I strongly suggest reviewing the entire document as it is very informative: CLICK HERE
Living Area Guidelines
- Heated by a conventional heating system or systems (forced air, radiant, solar, etc.) that are permanently installed in the dwelling – not a portable heater – which generates heat sufficient to make the space suitable for year-round occupancy
- Finished, with walls, floors and ceilings of materials generally accepted for interior construction (e.g., painted drywall/sheet rock or panelled walls, carpeted or hardwood flooring, etc.) and with a ceiling height of at least seven feet, except under beams, ducts, etc. where the height must be at least six feet four inches [Note: In rooms with sloped ceilings (e.g., finished attics, bonus rooms, etc.) you may also include as living area the portion of the room with a ceiling height of at least five feet if at least one-half of the finished area of the room has a ceiling height of at least seven feet.]; and
- Directly accessible from other living area (through a door or by a heated hallway or stairway).
“Above-Grade” is defined as space on any level of a dwelling which has living area and no earth adjacent to any exterior wall on that level. “Below-Grade” is space on any level which has living area, is accessible by interior stairs, and has earth adjacent to any exterior wall on that level. If earth is adjacent to any portion of a wall, the entire level is considered “below-grade.” Space that is “at” or “on grade” is considered “above-grade.”
There are very clear industry definitions of what constitutes living area. A finished basement, even partially above grade or walkout, is not considered in the square footage figure. It is adjusted for separately on residential appraisal forms.
Real estate appraisers and lenders generally adhere to more detailed criteria in arriving at the living area or “gross living area” of residential dwellings. This normally includes distinguishing “above-grade” from “below-grade” area, which is also required by many multiple listing services. “Above-Grade” is defined as space on any level of a dwelling which has living area and no earth adjacent to any exterior wall on that level. “Below-Grade” is space on any level which has living area, is accessible by interior stairs, and has earth adjacent to any exterior wall on that level. If earth is adjacent to any portion of a wall, the entire level is considered “below-grade.” Space that is “at” or “on grade” is considered “above-grade.”
Determining whether an area is considered living area can sometimes be confusing. Finished rooms used for general living (living room, dining room, kitchen, den, bedrooms, etc.) are normally included in living area. For other areas in the dwelling, the determination may not be so easy. For example, the following areas are considered living area if they meet the criteria (i.e., heated, finished, directly accessible from living area):
- Attic – note in the listing data that the space is located in an attic. [Note:If the ceiling is sloped, remember to apply the “ceiling height” criteria.]
- Basement (or “Below-Grade”) – note in the listing data that the space is located in a basement or “below-grade”. [Note: For reporting purposes, a “basement” is defined as an area below the entry level of the dwelling which is accessible by a full flight of stairs and has earth adjacent to some portion of at least one wall above the floor level.]
- Bay Window – if it has a floor, a ceiling height of at least seven feet, and otherwise meets the criteria for living area.
- Bonus Room (e.g., Finished Room over Garage) – If the ceiling is sloped, remember to apply the “ceiling height” criteria.
- Closets – if they are a functional part of the living area.
- Furnace (Mechanical) Room – if the furnace, water heater, etc. is located in a small closet in the living area, include it in living area even if it does not meet other living area criteria
- Hallways – if they are a functional part of the living area.
- Laundry Room/Area
- Stairs – if they meet the criteria and connect to living area. Include the stairway with the area from which it descends, not to exceed the area of the opening in the floor. If the opening for the stairway exceeds the length and width of the stairway, deduct the excess open space from the upper level area. Include as part of the lower level area the space beneath the stairway, regardless of its ceiling height.
- Storage Room
Concealed in the walls of nearly all residential construction are pipes, ducts, chases, returns, etc. necessary to support the structure’s mechanical systems. Although they may occupy living area, to avoid excessive detail, do not deduct the space from the living area.
There is no excuse for an agent not to know how to measure a home according to FNMA standards. An understanding of the process and accuracy in reporting the data would go a long way toward improving the process for both buyer and seller.
When measuring and reporting the living area of homes, be alert to any remodeling, room additions (e.g., an enclosed porch) or other structural modifications to assure that the space meets all the criteria for living area. Pay particular attention to the heating criteria, because the heating system for the original structure may not be adequate for the increased square footage. Although agents are not required to determine the adequacy of heating systems, they should at least note whether there are heat vents, radiators or other heat outlets in the room before deciding whether to include space as living area.
When an area that is not part of the living area (e.g., a garage) shares a common wall with the living area, treat the common wall as the exterior wall for the living area; therefore, the measurements for the living area will include the thickness of the common wall, and the measurements for the other area will not.
Interior space that is open from the floor of one level to the ceiling of the next higher level is included in the square footage for the lower level only. However, any area occupied by interior balconies, lofts, etc. on the upper level or stairs that extend to the upper level is included in the square footage for the upper level.
The amount of living area and “other area” in dwellings is based upon exterior measurements. A one hundred-foot-long tape measure is recommended for use in measuring the exterior of dwellings, and a thirty-foot retractable tape for measuring interior and hard-to-reach spaces. A tape measure that indicates linear footage in “tenths of a foot” will greatly simplify your calculations. For best results, take a partner to assist you in measuring. But if you do not have someone to assist you, a screwdriver or other sharp tool can be used to secure the tape measure to the ground.
Begin at one corner of the dwelling and proceed with measuring each exterior wall. Round off your measurements to the nearest inch (or tenth-of-a-foot if your tape indicates footage in that manner). Make a sketch of the structure. Write down each measurement as you go, and record it on your sketch. A clipboard and graph paper are helpful in sketching the dwelling and recording the measurements. Measure living area and “other area,” but identify them separately on your sketch. Look for offsets (portions of walls that “jut out”), and adjust for any “overlap” of exterior walls or “overhang” in upper levels.
When you cannot measure an exterior surface (such as in the case of attics and below-grade areas), measure the perimeter walls of the area from the inside of the dwelling. Remember to add six inches for each exterior wall and interior wall that you encounter in order to arrive at the exterior dimensions.
Measure all sides of the dwelling, making sure that the overall lengths of the front and rear sides are equal, as well as the ends. Then inspect the interior of the dwelling to identify spaces which cannot be included in living area. You may also find it helpful to take several photographs of the dwelling for later use when you return to your office.