Doesn't It Make Sense for the Listing Home Size to Match the Appraisal Home Size?Apr 20, 2021
Real estate is a price per square foot industry so why do most in the industry list a home for sale without measuring the home to determine a list price? Most agents rely on home size information found in county records to determine the listing price of the home. The assumption is that the information listed in county records is accurate but this isn't always the case! By today's standard the only time the home is measured is during the appraisal process to protect the buyer through the lender and this happens after all negotiations have already taken place. The appraiser's home size is the size used to determine the market value. Uh-oh...what if the listing size is different than the appraisal size?
Let's start with where the home size information found in county records comes from. Home size information comes from building permit information, mass appraisal aerial data or home size information that has just been passed down for many years. The county needs an approximate home size for tax purposes only. The home size listed in county records was never intended to be the source for home size in the real estate industry.
Now let's move on to the appraisal. Most home purchases are made with loans. The lender hires the appraiser to determine the value of the home before the lender agrees to loan money for the purchase of a home. The lender wants to ensure that the investment is safe. Because real estate is a price per square foot industry the very first thing the appraiser will do on site is to measure the home. The appraiser needs an accurate measurement of the home to determine market value. The appraiser does not rely on county records for a home size. The appraiser measures the home using the ANSI Home Measurement Standards to determine the size of the home. (More information can be found about the ANSI Home Measurement Standards HERE.)
So doesn't it make sense to start with the end in mind and have a pre-listing home measurement done to list the home with an accurate square footage based on ANSI Home Measurement Standards just like the appraiser will do? When the listing home size matches the appraisal home size chances are much better that the home will appraise for the contracted price; in other words, the home will make value. It is time to change the industry norm and measure BEFORE listing to start pricing homes based on an accurate size!
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