Square feet in flipping homes takes on a whole new meaning when you find out the depth of what it can do to value. So imagine purchasing a flip home and the title report you get while in escrow indicates that the square feet of the home is 1000 square feet. Well that’s what one can assume then if it comes from a title company right?…Nope! Wrong. That is where how to measure square feet really comes in handy.
You See, the real part of the lesson is not how to measure square feet, although that is really important, its why you need to measure the square feet before you actually purchase the home and pay for it. The important part of this story (or lesson) is to explain to you that even though the information you receive from a real estate agent, title report of tax assessor’s office is on documents, that’s not necessarily what the square feet really is.
What I have learned is that even though a home may have a nice addition that addition may not have run through the city building department for inspections and or permits. Not necessarily big news here…However, the real key to this lesson is that a tax collector can make an assumption of square feet just by a drive by, aerial view or field inspection. If they do this, it’s perfectly legal and in authority to do so. The tax assessor’s authority is to collect on any space they deem livable. They don’t have to verify at the city to compare what their inspector sees in the field. Therefore, the field tax assessor’s assumption gets input to their system as data and bingo, all public records are pulled from the tax assessor’s records instead of actual city records.
All that said, if the assessor’s sees 200 nice looking (livable) square feet on the house, then they tax on the total they calculate or 1200 square feet. If you note, on many documents, the small print reads something like, the information pertaining to square feet of this dwelling may not be reliable and buyer to verify their own conclusions based on this reported data. In other words, the buyer should measure in the field to verify so they know what they are really purchasing. In the event the purchase is financed, an appraisal does a field measurement as part of their appraisal, so that usually suffices. This is done to protect the bank, however the new buyer benefits by this part of the appraisal.
This post is written by (me) Don Gilmartin in order to inspire the DIY, design & flipping community. As CEO and founder of Fliptechs I have over 20 years of design, construction, and real estate, experience to share.