Just How Big is that House?

Earlier this week I was showing homes in a great neighborhood, all that were advertised to be around 3800 square feet.  My clients are moving from a smaller home, and through our home search, we have concluded that around 3800 square feet will probably be the perfect size to fit their needs.  We went into a very beautifully presented property that was marketed to be 3875 square feet (per the Taxing Appraisal District - HCAD).  My clients and I both immediately questioned this square footage because the home was obviously much smaller than any of the other 3800 square foot homes we had viewed. 

I questioned the listing agent about the square footage, but she has yet to respond. 

So, why is this so important?  Why would 200-400 square feet really matter to a buyer or a seller?  

I have lived in and owned property in several states.  There are many places where the price per square foot is meaningless; where a home is priced based on a price range in a given area.  However, here in Houston, we have a lot of housing inventory.  There are many homes that have very similar features.  The lowest common denominator to determine a home's market value is to break it down to a price per square foot basis.   Can you see where I am going with this?  If a buyer puts a contract on a home that they believe is 3800 square feet, and they are willing to pay $100/square foot based on the market comps, the contract price would be $380,000.  However, when the lender orders the appraisal, and the appraiser actually measures the home and finds it is actually 3400 square feet -- well, you can start to see where the problem lies!  Now we have a $40,000 difference between what the buyer initially offered and where the actual value is.  The seller will lose this deal unless he agrees to a new contract price.  The house will not appraise and the buyer is left with a very bad taste for the home. 

My point in saying all of this is when you sell a home and state the square footage, be careful to advertise it as correctly as you possibly can!  The appraisal district does not come into a home a measure the actual living space.  In general, the appraisal district measures the outside of a home and does not always make allowances for 2-story entries, family rooms, etc.   The most accurate source is to use a previous appraisal - from when you purchased the home.  If you don't have that available, appraisers will generally come and do a measurement for a very reasonable cost.  It is well worth it to know the size of the home you are selling, and gives confidence to a buyer who is purchasing!