Know What To Look For In A Home – Podcast Episode & Article

Know What To Look For In A Home – Podcast Episode & Article by Gary Boyer

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Real estate buyers today often avoid a listing because they think it’s priced too high relative to the livable square feet it has to offer. In some neighborhoods, like planned unit developments, price per square foot might be a fairly reliable value indicator because all of the homes are similar. It’s of limited use in neighborhoods with great difference in home style, size, age and condition.

Regardless of what the sellers report as the livable square footage, the buyers usually want to know what the public record on the home says. For example, if the sellers say their house has 3,000 square feet of living space, but the public record reports only 2,300 square feet, the buyers expect an explanation for the discrepancy.

It’s not only prospective buyers who are concerned when the public record differs from what is reported in the multiple listing service. Due to recent lender tightening, many appraisers consider only legal square footage, that can be verified with a building permit, to establish valuation.

Owners of homes that were added onto over the years without the benefit of building permits could end up with a low appraised value.

If the price on the purchase contract is much higher than the appraised value, the transaction could fall apart unless the buyers put down more cash or the sellers lower the price, or both.

A low appraisal might not cause a problem if the buyers are making a large cash down payment. However, if the purchase contract includes an appraisal contingency, the buyers could withdraw without penalty based on the low appraisal.

In California, properties are reassessed for property taxes based on renovations and additions done legally, with permits. Often, the local assessor’s office will update its record but the information doesn’t get into the public record that is accessible by real estate agents, buyers and appraisers.

Sometimes, when an addition is made to a home, the public record is not amended to include the additional square footage. In some areas, a seller can visit the Assessor’s Office and ask for a copy of the Property Profile Report on their home. If it’s not accurate, the seller can request that changes be made.

Mistakes in the public record aren’t confined to livable square feet. The public record also includes information about such things as the number of total rooms, the number of bedrooms and bathrooms, and whether there’s a garage. It’s not unusual to find many discrepancies between the Public Records and the actual home. It’s always best for the home buyer to investigate all of these aspects themselves and not rely on information given to you by the seller or even your Real estate Agent.