Square Footage Errors: A Major Risk in Real Estate Deals

The Impact of Square Footage Errors

Consider a notable case from Stouffville, Ontario, in 2020. A first-time homebuyer was informed that a property was approximately 2,100 square feet. However, an appraisal later revealed it was only 1,450 square feet. The buyer successfully rescinded the purchase agreement, highlighting the serious implications of such errors.

While this is an extreme example, even smaller discrepancies can influence buyer decisions, especially when pricing is based on cost per square foot. Inaccurate listings can erode trust and damage a real estate professional's reputation.

Why Do Inaccuracies Occur?

Several factors contribute to incorrect square footage in listings:

• Outdated Tax Records: Relying on municipal tax records can be misleading, as they may not reflect renovations or additions.

• Measurement Methods: Some assessments use exterior measurements, which can overstate usable interior space.

• Unpermitted Additions: Spaces added without proper permits may not be included in official records.

  
  

In Ontario, the Municipal Property Assessment Corporation (MPAC) has prohibited sharing its square footage assessments through MLS and public marketing due to these inconsistencies.

Financial and Legal Risks

Inaccurate measurements can lead to significant financial discrepancies. For instance, at an average price of $350 per square foot, a 400-square-foot error equates to a $140,000 difference. Such errors can result in lawsuits, professional complaints, and fines. Even if legal consequences are avoided, the damage to a professional's reputation can be lasting.

Best Practices for Accurate Measurements

To ensure accuracy:

• Avoid Sole Reliance on Public Records: Always verify measurements

• Hire Professionals: Engage qualified measurement experts or use reliable technology to obtain precise measurements.

• Understand Local Standards: Familiarize yourself with regional measurement guidelines, such as Alberta's Residential Measurement Standard (RMS).

  
  

By adopting these practices, real estate professionals can provide accurate listings, fostering trust and transparency with clients.

Enhancing Industry Standards

Accurate square footage reporting not only protects individual transactions but also elevates the entire real estate industry's professionalism. By prioritizing precision, agents contribute to a more trustworthy and reliable market.

This article is inspired by insights from Alexander Likholyot, CEO and co-founder of Planitar, the company behind iGUIDE, a leading prop-tech firm.