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I want the square footage accurate; sfq was a basis in which we placed an offer and contract, sight unseen, and we did rely on the sqf figure in the listing. And we placed the contract relying on our due diligence period in NC! If we had the time, which we don't have, we would lean on the lender to get this fixed, as it was its affiliated company which did the appraisal, which came out at the contract price, but lower than the list price. I did go to contract on this house with the sqf as an essential term as we compared sqf of other houses in the area (and in fact we did not go to contract with another house over price per sqf in the same neighborhood, negotiating hard with those sellers).
Both agents are trying to get this resolved quickly before our due diligence period expires in a few days. We got the appraisal this Monday. This is a big issue for them because the NC Real Estate Commission is quite concerned about accuracy in sqf and any variance over 5 percent is considered unacceptable.
It could well be that the most recent appraisal is wrong on sqf and it's later amended to reflect 5300-5400 sqf. We'd be happy with that result. On the other hand, if the appraisal has the correct sqf and the variance stands at 10 percent of the listed sqf, this is a basis for negotiation of the purchase price -- this lower sfq for this neighborhood, where most houses are in the 5500 range is material for future marketability. With a lower sqf, it would have us at the lower end of the price range for the neighborhood, on a sqf basis.
Yes, it was listed in the tax records, marginally lower than sqf listed in the MLS. This was a custom built house and the sellers haven't turned over the floor plans to us. We don't have the blueprints or CAD files for this. Certainly, we'd been less anxious if we had these in front of us.
If you are within your due diligence period in NC, you can walk away and have your earnest money returned. However, you will lose your Due Diligence money.
Your agent would do well to remind the listing agent that if you walk away, the listing agent must change the square footage in the MLS. Your agent can report the discrepancy to the MLS. This could get the listing agent fined if she doesn't chance it voluntarily. It could also affect offers from future buyers.
I'm sure your agent is reminding the listing agent that the offer they have in hand is better than the offer they MIGHT get after the MLS listing is corrected.
In NC, representing square footage accurately is extremely important. Many agents won't even measure houses themselves. We hire specialists to do it to ensure the accuracy. It's a pretty big deal.
It seems to me you have the upper hand. Hopefully you put down a reasonably small due diligence amount that you can afford and are willing to lose.
Jojow, thanks for the information and observations. We don't want to walk away from this purchase; it's a good house that will serve our needs and we have a lot of moving parts associated with it. We negotiated a zero dollar due diligence fee but we've already paid $3K in inspection and credit underwriting fees. We're not sweating this but it needs to get corrected within our due diligence period, which ends Tuesday. If the original appraiser can't re-determine sqf by Tuesday, then we'll ask for an extended period of time for a re-determination to be made.
Jojow, thanks for the information and observations. We don't want to walk away from this purchase; it's a good house that will serve our needs and we have a lot of moving parts associated with it. We negotiated a zero dollar due diligence fee but we've already paid $3K in inspection and credit underwriting fees. We're not sweating this but it needs to get corrected within our due diligence period, which ends Tuesday. If the original appraiser can't re-determine sqf by Tuesday, then we'll ask for an extended period of time for a re-determination to be made.
When you say it needs to be corrected do you mean just the sq ft amount or also the price?
If the most recent appraisal with its lower sqf is determined to be accurate, then yes the price has to be renegotiated. It's not what I purchased despite the views of some that my eyeballs should control what I bought! If the appraisal is inaccurate and the listed sqf in the MLS is correct, then an amended appraisal should reflect the corrected sqf.
Of course, unless listing agent or appraiser entered the tax roll's square footage, which would be grossly incompetent, that value is completely irrelevant to the conversation.
I would not immediately assume that the bank's appraiser was right.
Of course, the buyers agent has responsibility for square footage too. Perhaps the buyers agent should pull a tape and double check which measurement is right.
Recently, I had a case where the listing agent presented a complex home square footage as measured by an appraiser.
And the bank's appraiser came up about 4.9% short.
Buyer was SF-sensitive.
I got both appraisers' work sheets.
The bank appraiser's work sheet indicated complete ineptitude. The first level perimeter measurements did not close the loop. IOW, the appraiser did not have enough measurements to go on.
I went to the house, and measured the perimeter myself. I forget how many dimensions there were, but 33 or 35 sticks in my mind. I had the same number as the listing agent's appraiser, and the bank's appraiser was short 2 or 3 dimensions. And there were egregious errors in the dimensions. Several feet in multiple instances.
I told my client that I couldn't say that the listing agent's appraiser was perfect. We had a 6" variance at a bay window, and I saw how he may have erred.
But, I also told him I would bet the house on the first appraiser's numbers being more accurate...The bank's appraiser could not have possibly calculated any value with the measurements she provided. I totally believed she panicked and purposely swagged in a number that was within the magic 5%; low so she hadn't over-stated but not so low to wave a red flag on the agent or her appraiser.
And I turned in three worksheets to the lender for forwarding to the appraisal folks.
Rather than assume that either number is right or wrong, someone needs to perform some tie-breaker work...
Last edited by MikeJaquish; 04-20-2013 at 02:48 PM..
Be leary of tax role square footage. In one development, the builder had registered each model square footage but in my model one could have bonus room over the garage of about 300sq ft, that did not get registered if the option was ordered. Tax role was about 300sq ft less then actual of 2,500sq ft. Had to clear that up when listing.
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