Here’s one example of the real money difference when a broker reports a square footage total taken directly from the local tax records; rather than from a sketch in their work file or by obtaining the accurate number from an appraisal completed for the property. Each listing Agent is responsible for ensuring the finished living area is reported correctly. Even though we all know the Realtor® Code of Ethics talks about protecting clients, this unnecessary error happens every day all across the country. It costs real buyers and sellers real money.
6 Sandpiper Dr. Whispering Pines, NC
Finished Square Footage report in MLS = 1,780
Square Footage Total listed in Tax Records = 1,780
Square Footage Total reported in the appraisal = 1,863
Sold Price = $209,500
Price-Per-SqFt per MLS = $117.70
Price-Per-SqFt per Appraisal = $112.45
Difference of $5.25 per-sqft
Based on a similar home with 1,800 sqft of finished living area, potential difference in listing price:
1,800 x $117.70 = $211,860
1,800 x $112.45 = $202,410
Difference of $9,450.00
This is a basic, rectangular home that was easy to measure. The next agent (or appraiser) that uses this home as a comparable sale will have their calculations misguided by apx. $10,000. It’s not just a small clerical error. These intentional mistakes turn into real dollars, and for something as simple as the accurate finished square footage details. This is only a small difference in a non-complex property and it could easily equate to almost ten grand. That’s real money coming out of someone’s pocket. It also influences appraisals and CMAs every time this sale is used as a comp. In this case, the next homes will be overpriced, based on the misinformation of this one sale. If this happens in numerous sales, it can alter appraisals and CMAs for many transactions in the future. Too many times, low appraisals can be tracked back to nothing more than inaccurate square footage numbers (but appraisers still get the blame). There is a great deal of power in the square footage numbers brokers report to the MLS. Even if it’s only $5-6,000. Don’t think that’s a big deal? Get out your checkbook! We work with people’s single, largest, lifetime investments and their financial futures. They deserve better! It’s time for Realtor® reform!!!