Real Estate

How big is that house, really?

Square footage is a moving target, professionals say

A home's square footage is a number easily misrepresented, especially when determining ever-ambiguous "liveable space." Measurements can be taken in numerous ways, and what to include in those measurements -- garages, basements or porches -- is often unclear.

"It's actually a bit of a problem," said Michael Dreyfus, CEO and broker at Dreyfus Sotheby's International Realty in Palo Alto, of these numerous subtleties.

Robert Bustamante, director of compliance and support at MLSListings Inc., has noticed the issue on a local level, recalling a few cases in Palo Alto where an agent misrepresented a home's square footage online.

But misrepresentation is a tricky thing, Dreyfus explained. Issues of what to include and how to measure are magnified by nuances in law and ethics, complicating the distinctions between intended accuracy and purposefully opaque data.

"There are customs ... that vary from community to community," Dreyfus said. "There's no universal way of arriving at that number."

Bringing in a professional home appraiser might seem like a sure-fire way to get an accurate measurement. But some appraisers, for example, will wrap a measuring tape around the outside of a house to garner its square footage. Others will measure room by room, and still others will come in with high-tech processes like lasers to produce a magic number.

And what to include in that number is a blurry concept. Some sellers or agents may want to include a home's basement, for example, especially if it's heated, has windows or has been turned into a home theater.

Dreyfus said that basements are real space that often cost sellers real money. And a seller who put money into the home, whatever room, wants to see a return on investment. Of course, sellers may often want to include spaces that other parties may not find relevant or valuable.

"There's a habit amongst new home builders to include all square footage," Dreyfus said. "Some get as aggressive as including covered porches." He added that there is no California law that regulates how a home's square footage must be calculated.

There are only rules within the real-estate community that can supply a sense of direction. The National Association of Realtors (NAR), for example, has a Code of Ethics and Standards of Practice that guides its members. But homebuyers should remember that not all real-estate agents belong to NAR, and are thus not all Realtors. Additionally, since home appraisers, property managers and real-estate counselors can be members of NAR, not all Realtors are real-estate agents.

Article 12 of the Code states, "Realtors shall be honest and truthful in their real-estate communications and shall present a true picture in their advertising, marketing, and other representations."

Violating any part of the Code could mean expulsion from the organization or fines.

Another such regulated place is MLSListings. Multiple listing services are data-sharing companies that evolved over the years from paper records into online databases. Its clients do not have to be members of NAR to join, according to Jim Harrison, president and CEO of MLSListings, though all of the site's users must comply with guidelines that borrow from NAR's own regulations.

According to Harrison, MLSListings also strives to clarify the concept of "livable space" for its users.

"If you put furniture in it, it's livable space," said Harrison, noting that common sense and a required training process can help clarify the term for Realtors and real-estate agents who post on the site.

On the company's website, the expectation is that agents will blow the whistle on each other if they notice questionable numbers pertaining to square footage or any other data.

"It's a self-policing, self-regulating community," Bustamante said. But, he added, "We're not property inspectors."

According to Bustamante, the company will fill in a listing's square footage with information gathered from tax records. But this number can and should be changed if the poster has a more up-to-date number.

"The agent has the obligation to correct it," he said, explaining that an agent must also attribute the information's source, which could be the agent himself, the seller or an appraiser.

"We like to use existing plans if available," Dreyfus said by email of himself and his associates. "If not (available), we will use the County Assessor number unless we have a reason to doubt that number. Then, we may hire someone to measure the property."

Beyond the stand-alone number for square footage, MLSListings supplies fill-in boxes for other measurements, like the garage's square footage. But trouble abounds when agents disregard these distinctions, either intentionally or not.

Bustamante said that agents are generally given 48 hours to amend a posting if its accuracy has been called into question. An accused agent may also be subject to a hearing, in which a panel would look at established patterns of behavior.

"There's an entire process that allows you to discover intent," Bustamante said.

If an agent doesn't adjust material deemed incorrect, fines ensue, varying by offense from $100 to $2,500 for the first lapse. The maximum amount an agent may be fined is $15,000 in total for a single violation.

MLSListings also employs a support team to help its users clean up their data if needed. And if an inaccurate listing isn't updated by its poster, the company will change it.

Despite the fact that companies like MLSListings don't enforce California law, Dreyfus said that "deliberate misrepresentation is a lawsuit. ... It's dead wrong and dead actionable."

Misrepresentation is fraud, but it takes a jury to determine whether it's of material value that information, such as square footage, should have been listed as X as opposed to Y. A jury would also determine if an agent knowingly misrepresented such information.

Bustamante said that one Palo Alto property with misrepresented square footage was a simple case -- the agent needed only to elaborate that the home's square footage included a garage.

Another Palo Alto case was not so easy. Bustamante labeled it a "ships in the night scenario." By the time the company had notified the agent that he or she had posted inaccurate information, the home was already sold.

But, as Harrison said, "Just because (a property) is sold, it doesn't mean it's too late to fix" the information.

In this case, MLSListings notifies all parties involved. Next, the company "unilaterally (corrects) all these to be materially correct," according to Bustamante, meaning it will update its own records so that the square footage of the home is accurate the next time it is sold. MLSListings' records also feed into and update other public sources, such as Realtor.com, Zillow and Trulia.

"This thing that's happening, it's new," Bustamante said of these recent cases. "We don't see the value (of misrepresentation)."

Dreyfus, too, deemed the method bad practice.

But according to Harrison, misrepresentation in real estate doesn't happen often.

"Very rarely does anyone go in and put in a ficticious square-footage number," he said.

Dreyfus added that in many cases, the difference between 1,800 square feet and 2,200 square feet may not even be noticeable. But due to the lack of a standardized measuring system, factors like a home's location and amenities may be better gauges of desirability.

"Be wary of buying at price per square foot," Dreyfus cautions. "There's a lot of gray in there."

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