I took my initial real estate class in Oklahoma City in September of 1989. It was something i always wanted to do, but this time it was for changing from a retail career to a real estate one. I had a great teacher which is fortunate to start off well. I do remeber the class getting angry with him though. he wanted to spend time talking about avoiding liability. Many protested saying you are supposed to teach us how to pass the real estate exam! He replied, I am going to teach you how to pass the test in the real estate world. Guess where he started?
Measuring the square footage of a home, and how to talk about it, and how to represent it. it is a lesson i never forgot, especially when he told stories of Realtors being sued becasue they told a client that a house was exactly a square foot size. When it turned out to be 300SF smaller, they ended up buying them a home. So an important phrase came into my everyday speech, MOL which stands for more or less. Ikay that is pretty basic. Do you have a point beside this?
Yes I reply. I was in our MLS today checking for listings in a certain area and a certain size. The home was listed by a Realtor as 1315SF agent measured. Red Flag No. 1. Then in the remarks the Realtor said he added the Florida room to the size, and in looking at the comparables he valued the size of the glass add on to the patio at $100 square foot for the 240SF add on meaning it was worth $24,000, or the same value as the brick exterior original part of the house. Red Flaf No. 2.
Red Flag No. 1. You are asking for trouble when you put in agent measured. It has been 17 years ago but I took appraisal courses and was certified. It is much harder now to become an appraiser, but I learned enough to help me as a Realtor even today. This was a realtor who didn't know how to measure. Where did he get the numbers? The plans? Folks, one of the hardest part of the classes was getting a measurement somewhat right. I say somewhat becasue it is not an exact science. Three appraisers may vary 10 to 20 square feet but it is close not exact. If a Realtor not qualified as an appraiser puts in what they think is the size, get ready for the cpmpalints and possible suits. It you are going to use a measurement, go with the courthouse records, ot if you know a real apprasial square footage use it. If the appraisal is relatively new I will use that even if it is smaller than the house. Remeber MOL. it is just that i would trust an apprasiers MOL more the the courthouse.
Red Flag No. 2. Pricing a home is where you separate the quality of a Realtor. Again, even with excellent statistics pricing is not an exact science, but like the appraisal it is important to get close. Starting with this premise let's evaluate the add on. I know that apprasial guidelines have change since my classes but sometthings remain the same. This was a galss like addom to the patio. it did not change the roofline, the construction was not the same as the main house, and no central heat and air was added. So essentially you have an improved patio. So when you are pricing the home, think like an appraiser. First, the appraiser will measure the orignal construction and give a value, so lets say that that is 1097 (MOL) and it is worth $100 per square foot. The given that the add on is 240SF what is it's value. Could be zero, could be $5000, but not $24,000. So let's be generous and say $5,000. Now you have a home priced at $114,700, not $137,700. If you add in the greater fool theory that someone will pay the higher price remember that this is 2009, not 2005, and the appraiser does not subscribe to the greater fool theory like a buyer. At that point, that buyer may have the most valuable $400 real estate lesson he can receive in how to price a house based on appraisable square feet. And the listing Realtor may find themselves in front of a Board hearing or the Real Estate Commission.
Take away. remember MOL, when in doubt call an appraser for advice, and never no never enter a listing into the MLS as agent measured. Thank you my first real estate teacher, Mr. Kraettli. 20 years later I remember you lessons.