Posted by Dawn Griffin
Understanding Square Footage in Real Estate
Square footage plays a critical role in real estate, influencing home values, appraisals, and buyer decisions. However, the way square footage is calculated can sometimes cause confusion. Let’s break down what counts as square footage, how it’s measured, and why it matters.
What Counts as Square Footage?
When measuring square footage, only certain areas of a home are included:
- Finished Spaces: These must have walls, floors, ceilings, and be climate-controlled. Think of living rooms, bedrooms, and finished attics.
- Above-Grade Areas: Only spaces above ground level are typically included in the main square footage.
- Connected Areas: The spaces should be directly accessible from the main living areas of the home.
What Doesn’t Count?
Some areas, even if they’re functional or aesthetically pleasing, don’t qualify as part of a home’s square footage:
- Garages: These are excluded even if they’re finished or attached.
- Unfinished Basements or Attics: These don’t count unless they’re fully finished and meet ceiling height requirements.
- Outdoor Spaces: Patios, decks, and porches, even if covered, are not included in square footage calculations.
Real Estate Listings vs. Appraisals
There’s a distinction between how square footage is presented in listings versus appraisals:
- Listings: Real estate agents often rely on public records, builder plans, or third-party measurements to list square footage. It’s essential for this information to be accurate to avoid misleading potential buyers.
- Appraisals: Appraisers use stricter guidelines, such as the ANSI Z765 standard, which provides a uniform way to measure square footage. For example, basements are often noted separately rather than included in the above-grade square footage.
Appraisers started using the ANSI Z765 standard for measuring square footage in 1996, but it became mandatory for Fannie Mae appraisals in April 2022.
Key Rules for Square Footage Measurements
Certain rules help ensure square footage is measured consistently:
- Ceiling Height: Spaces must have a ceiling height of at least 7 feet to count as square footage. In areas with sloped ceilings, at least 50% of the space must meet this height.
- Basements: Finished basements may add value but are typically listed separately from the main living area’s square footage.
Why Accurate Square Footage Matters
Square footage isn’t just a number; it has real-world implications:
- Home Value: Buyers often compare properties based on price per square foot. Accurate measurements ensure fair comparisons.
- Appraisals: Overstating or misrepresenting square footage can create problems during the appraisal process, especially for financed transactions.
- Trust: Transparent and accurate square footage builds trust between buyers and sellers.
Tips for Sellers
If you’re preparing to sell your home, follow these tips to ensure your square footage is accurately represented:
- Verify Measurements: Consider hiring a professional to measure your home’s square footage.
- Highlight Additional Spaces: Finished areas like basements or attics may not count as main square footage but can still be valuable features to emphasize.
- Be Transparent: Accurately representing your home’s size builds credibility with buyers.
Conclusion
Square footage is a critical factor in real estate, affecting how homes are priced and perceived. Whether you’re buying, selling, or appraising a property, understanding how square footage is calculated and why it matters can help you make more informed decisions.
Have questions about square footage or how it impacts your home’s value? Reach out to our team for expert guidance!
