When it comes to buying or selling a home, square footage is a critical factor that can significantly impact the property’s value. However, understanding how square footage is calculated and the differences between a home appraisal and an assessment can be confusing for homeowners and potential buyers. In this article, we’ll shed light on these concepts to help you make informed decisions in the real estate market.
What’s the Difference Between an Appraisal and an Assessment?
Before diving into square footage, let’s clarify the distinction between a home appraisal and assessment. Both are used to determine the value of a home, but the terms are not interchangeable.
Appraisal
A home appraisal is an unbiased estimate of a property’s value conducted by a state licensed appraiser. It is the fair market value of a home. The appraisal impacts the home selling price and mortgage amount and is used to help ensure that the lender and home buyer are not asked to loan or borrow more money than the home is worth. Factors that can influence the value of the home include location, condition, and amenities. Appraisal calculations have been standardized and rooms with dormers or lofts may no longer be included in the home’s square footage and therefore, not included in the corresponding appraised value. If you are getting a mortgage, you may find the appraised value is less than you thought it would be, so plan accordingly.
Assessment
An assessment is the value assigned to a property by a tax assessor for property tax purposes. This value is used to determine your annual property tax bill. The assessed value may not reflect the current market value of the home.
Square Footage Matters
Square footage is a crucial metric in determining a home’s value. The larger the square footage, the more valuable the property tends to be. However, how this square footage is measured can vary.
The rules have changed to standardize how square footage should be counted in appraisals. The American National Standards Institute (ANSI) provides guidelines for measuring the square footage of single family homes to ensure consistency in the real estate industry. ANSI standards take into account the area within the exterior walls, excluding non-livable spaces, such as garages and unfinished basements.
The measurement standard requires a minimum ceiling height of seven feet to count towards the square footage of the home. For example, consider a home that is 2,000 square feet with 1,500 square feet on the main floor and 500 square feet on the second floor. The second floor has 6 ½ foot ceilings. Because the ceiling is under 7 feet, the 500 square feet on the second floor does not count towards the total square footage.
Knowing these standards can help you understand what’s included in a property’s square footage.
What Homeowners Need to Know
For homeowners, it’s essential to be aware of the square footage of your property as it can influence your home’s market value. Keep in mind that updates or renovations can impact your property’s square footage and consequently, its value.
What Buyers Should Consider
As a potential buyer, don’t rely solely on the square footage mentioned in property listings. Although deemed reliable, some information is not always as accurate as it should be. You should verify measurements and other information. Also consider the new ANSI code for some areas that may not be calculated into the square footage valuation and are added as an extra room area. This ensures you’re making an informed decision and potentially negotiating a better deal.
If you are buying or selling a home and have questions about a home appraisal or assessment, contact your Zuber Realty agent.