Real estate misrepresentation of square footage: What you need to know

by Corben Grant on 21 Mar 2022

One of the key variables that are included in almost any real estate sale is the measurement of the square footage of the property. While it isn't the be-all-end-all measurement of a home's value, it is a very important and useful measurement.

For sellers, the square footage plays a large part in determining the home's value and can be a big selling point. For buyers, the square footage of a home not only tells them how much usable space they can expect to have if they buy said home, but can also help them to make apples-to-apples comparisons of different homes on the market based on a price per square foot comparison.

The key thing here that many take for granted is just how this square footage measurement is determined. Sure, you could just take out the tape measure and calculate the exact floor space of the property, but this isn't actually how it's done.

For one, this is a very time-consuming thing to do with every home on the market. Another factor is that not all floor space is made equal. Things like the angles of walls, the sloping of the roof and the differences between above grade and below grade square footage can all play a part in how much of the building's space is counted in the square footage measurement.

To make it complicated, many different parties may offer a square footage measurement including real estate agents, appraisers, photographers, home builders, and more. Each of these parties may have their way of reaching a specific figure. Across the real estate industry, there is no single standard method of determining square footage so you must always take the measurement with a grain of salt.

Usually, this is not too much of a problem but it has been a matter of debate in cases where the square footage of a home has been (intentionally or unintentionally) misrepresented when a home is posted to a multiple listing service (MLS). In this case, it can lead to frustrated buyers and can land the sellers and their agents in hot water.

In this article we will look at:

  • • Why would sellers misrepresent square footage?
  • • Are there consequences for misrepresentation?
  • • How can you calculate square footage accurately?
  • • How can you protect yourself and your client?

Why would sellers misrepresent square footage?

There are two reasons why a seller or seller's agent may misrepresent the area of a home in a listing.

The first is due to an honest mistake. There are differing views on how the area should be measured so there is going to be an acceptable variance between measurements. Beyond that, anyone who has taken a math test can tell you that sometimes calculation errors happen and this can lead to an incorrect figure.

The other reason would be an intentional misrepresentation of the area of a home. This may be done to make the home more appealing to buyers to make it sell faster, or for an inflated purchase price.

Regardless of the intent, misrepresentation of square footage is still an issue that the buyer should be aware of and attempt to correct if the difference is worryingly large.

What are the consequences?

As we mentioned, there are no real standards or exact ways to measure the square footage of a home so there will be variances depending on who you ask. Because of this, it’s not exactly simple to decide whether or not misconduct has taken place when there is a discrepancy in listed home sizes.

If a home is sold or is in the process of being sold and a discrepancy is noticed, the situation will have to be reviewed on a case-by-case basis to determine if the discrepancy was intentionally misrepresented or not. Based on the intent of the error, the size of the discrepancy and when the issue was raised, a court can rule one way or the other who is in the wrong.

If the area measurement of a home is noticed before a home is sold, a buyer may have recourse to terminate their transaction and have their deposit returned. If an error is noticed after the fact, the homeowner may be able to sue the previous owner or the listing agent for the differences in home value that result from a smaller than expected home.

However, since the valuation and measurement of a home can vary so greatly, these will not be open and shut cases and will require some significant legal review that could very well end up ruling against the buyer.

There are also regulatory bodies such as the Ontario Real Estate Association that hold their real estate professionals to account in such misconduct situations. An agent's governing body can impose warnings, punishments, fines, or cause an agent to lose their certification entirely, depending on the circumstances.

Why do measurements vary?

There are many different measurement systems used in real estate to determine the size of a home. For a simple floor plan, there should not be too much variance in measurements, though things can get a bit more complicated as structures become more complex.

For one, square footage generally measures primarily the living space of the home such as the living room, kitchen, bedrooms, and other primary living spaces. Finished basements may be included, albeit at an adjusted level to make up for the below-grade placement. Areas like garages, attics, patios, balconies and more should not be included in this measurement, though they may be sometimes, especially in the event of selling a condo.

Then there are other considerations such as the height and slope of the ceiling. If you have a sloping ceiling or a sharp angle in a wall, there may be floor space there, but how much of that floor space is actually usable and should be included? That's a contentious question and can lead to some of the variances you see between measurements.

How to protect yourself and your clients

If you are concerned about possibly being misled about the size of a home you are purchasing or helping a client to purchase as a buyer agent, there are a few things you can do to protect yourself.

The first would be to, whenever possible, work with reputable real estate agents who you trust and are familiar with. Mistakes can still happen, but an agent with a good track record, especially one who is part of a reputable brokerage, is less likely to intentionally mislead buyers. They will also be more likely to make things right in the case of an honest mistake.

Another way to protect yourself is to have a professional measuring company double-check the measurements of the home. Sometimes this will be done as part of your lender's appraisal, and otherwise, you may be able to include it in a home inspection. Expect the possibility for some variance, but anything substantial could be cause for concern.

You should also carefully read any contracts before signing to make sure you are within your legal right to dispute measurement discrepancies. Sometimes an MLS listing will include wording such as "Buyer to verify all measurements". If this wording is used in official documents, it may make it more difficult to dispute any errors, as it can be argued that the buyer has waived their right to dispute measurements.

Conclusion

All things considered, though variations exist and instances of intentional misrepresentation are rare, the damages that can result from misrepresentation in square footage can be significant. Buyers and their agents should do all due diligence possible to make sure measurements are accurate and to protect themselves from potentially inflated measurements.

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