Inexact science of square footage causing inaccurate appraisals, unhappy buyers
March 04, 2010 04:15PM By Candace Taylor
This is the floorplan used to advertise 201 West 16th Street, apartment 4B.
During the boom, New Yorkers increasingly relied on "price-per-square-foot" as a way to compare rapidly rising apartment values.
The metric is even more popular in the downturn, as discount-crazed buyers look for good deals.
But price-per-square-foot isn't as reliable a measure as they think. Unbeknownst to many shoppers, it's extremely difficult to determine the true square footage of a Manhattan property, experts say.
"When it comes to square footage in New York City, it's the Wild West," Bill Staniford, the CEO of real estate data Web site PropertyShark. "It's measured in so many different ways."
And in the current downturn, the difficulty of determining square footage is contributing to a number of other problems, from low appraisals to ruined deals.
Staniford, who constantly fields questions from brokers about inaccurate square footage data on file with the city, said using price-per-square-foot as a measure of value is "totally pointless."
That puts "every single broker in a very difficult situation, unless they want to break out the measuring tape," he said.
Even then, they might still be wrong.
It's fairly easy to determine the square footage of a suburban single-family home: measure the footprint of the house, factor in the number of stories, and you're done.
Manhattan apartments are a different story.
The square footage of an apartment is determined by measuring the space between the interior walls, including bathrooms, closets and foyers, explained appraiser Jonathan Miller, president of appraisal firm Miller Samuel. But Manhattan apartments, especially prewar co-ops, often have hard-to-measure elements like turrets, winding hallways and oddly shaped rooms. Miller said buildings like 455 Central Park West, with its its large, circular turret units, are especially difficult to measure, along with notoriously elaborate buildings like the Dakota and the Osborne.
In many apartments, "you could have different people measure and they'd get five different numbers," said Douglas Heddings, founder of the Heddings Property Group at Charles Rutenberg Realty in New York City, who has written about square footage challenges on his blog, TrueGotham.com.
To make matters worse, there is often little or inaccurate square footage data on file with the city. When buildings were converted to co-ops in the 1980s, they were not required to list the square footage in their units in the offering plan, Miller said.
Condo offering plans are required to list square footage, but each developer measures it differently, which is legal as long as they disclose their methods in the plan, Miller said.
"Many developers, in order to drive down the price per square foot, include portions of common hallways or elevators shafts," he said. "Some include a percentage of outdoor space."
Moreover, when units are combined or renovated, changes to the square footage are often not updated in the public record, he said.
As a result of all these factors, brokers in the past often avoided stating the square footage in their marketing materials.
"Years ago, you really sold by the number of rooms," said Diane Ramirez, president of Halstead Property.
In 1998, the buyers of a $2.5 million co-op at 983 Park Avenue backed out of their contract and filed suit against the seller and broker Stribling & Associates. The buyers claimed they were told the apartment was 3,300 square feet, but that it was actually closer to 2,800 square feet. The case was settled out of court for an undisclosed amount in 2000, according to the New York Times.
After that, some firms explicitly forbade their brokers from telling buyers the square footage, for fear of litigation.
"For years, we would not allow agents to put square footage [on their listings], because we knew it was fraught with danger," Ramirez said.
But as more new condos sprang up during the boom, with their dimensions listed in the offering plan, buyers became more and more interested in square footage.
"They love hearing what the square footage is," Ramirez said. "It became a number and an analysis that the consumer liked."
These days, price-per-square foot is a popular measure of value, even in co-ops, because it's the best way of comparing apartments with the same number of rooms but vastly different dimensions.
"Price-per-square-foot is really what drives the understanding of value for consumers," Miller said. "It's really the language of the market."
That's forced many brokers to start using square footage data again, but nearly all real estate companies now have disclaimers stating that representations of square footage are just estimates, said Pamela Liebman, CEO of the Corcoran Group.
Brokers, perhaps emboldened by this disclaimer, often round up or simply exaggerate square footage in their listings, experts say. Miller said that when he appraises apartments, he usually finds that the apartment is 5 to 10 percent smaller than advertised.
Co-ops, in particular, often appear to get larger each time they are sold.
"If you look at any given co-op, you will often find that it has grown," Heddings said. "A 650-square-foot one-bedroom in 1980 may now be 900 square feet."
Recently, Richard Hamilton, a senior vice president at Halstead Property, was marketing unit 16B at 201 West 16th Street (see accompanying image) in Chelsea, a one-bedroom apartment that, according to his calculations, was just under 700 square feet. He was displeased to discover that an identical apartment on another floor -- number 4B (see accompanying image) -- was listed at 800 square feet.
Hamilton's floor plan said that the living room was 20 feet by 13 feet, while the brokers for 4B, Adrian Castillo and Glenn Minnik of Prudential Douglas Elliman, used a floor plan that put the room at 20 feet by 15 feet.
Hamilton said he used the building's original floor plan and double-checked to make sure it was accurate. "It's quite obvious that it's 13," he said. "Anyone could have looked in that apartment and known it was not 15 feet wide."
Minnick said he used the square footage information that had previously been in Elliman's system.
"That was what was in our listing system," he said. "We just add photos to it."
He disagreed with Hamilton's assessment, saying the apartment is "definitely larger than 700 square-feet."
He emphasized that square footage estimates are "very subjective."
Hamilton said brokers who strive for accuracy are often penalized, because buyers want the apartment they believe is larger.
"I do my best to be as honest as I can," he said. "But sometimes by telling the truth, you look bad, because they want to see the bigger apartment."
To avoid that situation, he usually avoids listing the square footage, instead handing out tape measures at his open houses so buyers can measure for themselves.
Aside from potential litigation, differing interpretations of square footage have further ramifications in the current climate.
If the bank's appraiser or attorney finds that an apartment is smaller than advertised, it could torpedo the deal, said Melanie Lazenby, a senior vice president at Elliman.
"The last thing you want when you think you have a deal is a surprise," said Lazenby, who relies on the figure in the offering plan or, for older apartments, hires a professional to draw up new floor plans. "You don't want that call asking why there is a discrepancy. It could change the price of the apartment."
Lack of accuracy in square footage is one reason so many deals are falling apart due to low appraisals, Miller said.
To determine the value of an apartment, appraisers look at the prices of nearby apartments of a similar size. But if the square footage of those comparables have been exaggerated, that can hurt the value of the apartment in question.
"They may be comparing four 1,200-square-foot apartments, but only one is actually 1,200 square feet," Heddings said.
Miller said most experienced local appraisers are aware of these discrepancies and use floor plans, not broker data, to compare sizes. But more and more out-of-town appraisers are now doing work in Manhattan thanks to recent guideline changes.
"When you see out-of-town appraisers, they're just relying on the broker square footage because they don't have the floor plans," Miller said. "It unfairly penalizes the subject apartment."
Against this backdrop, how should brokers proceed?
"The best thing to do is talk about it as, 'this space costs x,' and don't worry about the square footage," Staniford said.
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Comments
Anonymous
brokers always inflate the square footage to make this metric work. its bs
Comment #1 Posted By: Anonymous 03/04/10
Anonymous
If it is a condo, the sf is the sf as by the AG. If it is a coop, they lie.
Comment #2 Posted By: Anonymous 03/04/10
Anonymous
Jonathan Miller is a flack for Lorber and Herman.
Comment #3 Posted By: Anonymous 03/04/10
Anonymous
Why is this news? Hasn't this been the case since we lived in caves?
Comment #4 Posted By: Anonymous 03/04/10
Anonymous
Pathetic. Square footage is not "very subjective". Maybe some basic geometry classes would help the industry. Brokers and sellers should be accountable for their representations like any other business and not hide behind some ridiculous comment that it's subjective. If you can't figure it out accurately, then don't advertise it, and of course, go back to school.
Comment #5 Posted By: Anonymous 03/04/10
Anonymous
Putting common areas into square footage estimates should be banned as it makes absolutely no sense to the resident. The common area square footage should listed separately. Including it would be like saying that there is a doorman in the unit. You only get that at 15 CPW.
Comment #6 Posted By: Anonymous 03/04/10
Anonymous
Comment # 6: you forgot to mention that most worthless NY brokers (sorry for the pleonasm) add a % of Central Park, St Patrick and the ESB to the square footage
Comment #7 Posted By: Anonymous 03/04/10
Anonymous
The smarmy excuse by the Douglas Elliman agent about why he used a fabricated floorplan is ridiculous. The Halstead agent seems like he tries to be honest, too bad others are not more like him.
Comment #8 Posted By: Anonymous 03/04/10
Anonymous
This fact really upsets me about the real estate market. The biggest investment in your life and you cant get an honest answer about real sq footage. Id go further I want CUBIC feet to assess ceiling height too. In this pathetic business they lie and now it becomes the norm so the brokers justify it by say "we cant really say exactly how big it is". This is total BS!! When I buy a stock at least they give you all the pertinent info a the stroke of a key on your PC. Companies lie about their stock too but at least its there for us to see. This is exactly why I do not trust and brokers at all. Cmon gimme a break u cannot give me sf on a property!!...thats like saying I cant give you size of your show! Just freakin add it up and stop the bull!
Comment #9 Posted By: Anonymous 03/04/10
Anonymous
It should be ILLEGAL not to give accurate sf of property. The brokers should be fined a hefty sum if they are off base by more than 2%. My research indicates roughly that all apts lie about 10%.What a crappy business.
Comment #10 Posted By: Anonymous 03/04/10
Anonymous
Brokers get out a ruler a measure and report honesty. Dont measure common space, dont gimme baloney. Just measure and report. If brokers are too lazy or not smart enough then just dig ditches for a living. dont ask for 6% for doing virtually nothing. work and report accurately or dont get in this pathetic business.
Comment #11 Posted By: Anonymous 03/04/10
Anonymous
Yeah why dont you just add all of Riverside park into the sq footage! I love brokers.
Comment #12 Posted By: Anonymous 03/04/10
Anonymous
How hard can it be to measure an apt? For a million dollar plus investment buyers should demand accurate reporting of square footage. It should be in the law and have a standard by which all apts are measured by square and cubic feet. This is criminal not to have.
Comment #13 Posted By: Anonymous 03/04/10
Anonymous
The solution is so simple that it boggles my mind that people don't do it: Buyers. bring your own tape measure, pencil & paper and TAKE THE MEASUREMENTS YOURSELF. That is how to get an accurate sq. ft. measurement. Yes, it's tedious, but if you are too lazy to do this when purchasing what will quite likely represent your biggest financial investment, you are a fool.
Comment #14 Posted By: Anonymous 03/04/10
Anonymous
What we need is regulation that defines once and for all the different metrics of a building: - gross sf - net sf - usable sf - rentable sf but this will only make landlord's life harder. Most of the commercial buildings in NYC are overpriced and over their actual square footage. I dealt once with a commercial broker that argued that the rentable sf on the floor was 12,500 sf while the building dimensions where 100x100 as per the tax lot plan: an obvious rip-off on the price per square foot. Anyway, we need regulation, but once again the REBNY lobby is not ready to move on this as it will mean real losses for lots of landlords and property owners: they don't need this in the middle of a recession...
Comment #15 Posted By: Anonymous 03/04/10
Rich Hamilton
#14 or come to my open houses and get a free tape measure to keep! 5 Architects could measure an apartment and each will get a different number, BUT they should be in the same range. I strive to be as honest as possible on Sq Ft. I am not always right, but I will not intentionally mislead. There are a lot of good agents out there, if you know one is not being honest, find one that is.
Comment #16 Posted By: Rich Hamilton 03/04/10
Anonymous
@ Rich Hamilton - yes 5 architects could measure an apt. and each will get a different number, which is why I always do my own measuring. Measuring's not rocket science - it's something anyone can do if only they will bother to do it.
Comment #17 Posted By: Anonymous 03/04/10
Anonymous
Good agents? Is there a such thing? Commission based incomes only creates bad apples. Too easy to lie and exaggerate, fosters greed. Yes I do bring my laser/sonic ruler for quick and reasonably accurate readings so my "good" broker cant argue. Actually in a case where this was done the agent argued that my poor technique caused a discrepancy. Saw an apt in Ansonia..claimed it was 1100sf but was measured at 975 sf. Dont trust broker just measure yourself. Most will lie.
Comment #18 Posted By: Anonymous 03/04/10
Anonymous
The brokerage community is made up of PEOPLE and PEOPLE are liars. It doesn't matter what business it is this is always the case. If many of these commenters think they are so "honest" they are full of S#!T. I've met many of them and they are too, worthless.
Comment #19 Posted By: Anonymous 03/05/10
Anonymous
The bldgs mentioned above are a very small % of the market. With all the new construction of the last decade it's pretty straight forward and measured on the interior, wall to wall is the way it should be. It's not only brokers who inflate sq. footage trades people do as well. I have a roof 20'x30', 600 sq.ft a roofer gave me an estimate for 1,000 sq.ft. & when I asked him what he was going to do with the left over 400 sq. ft. he just turned around & walked away. A$$ !
Comment #20 Posted By: Anonymous 03/05/10
Anonymous
"...every single broker in a very difficult situation, unless they want to break out the measuring tape," he said. OH NO, I HAVE TO ACTUALLY WORK AT MY JOB, HOW DIFFICULT!
Comment #21 Posted By: Anonymous 03/05/10
Anonymous
It's not difficult to measure a room, but there are many legal ways to calculate sq ft for the entire apartment and brokers should not be involved into that. go buy your $2 measuring tape. Do attorneys tell to check the sq ft during the due diligence, I don't think so, what about that???
Comment #22 Posted By: Anonymous 03/05/10
Anonymous
isnt' illegal to represent sq ft for a coop?
Comment #23 Posted By: Anonymous 03/05/10
Anonymous
Giving out measuring tapes at an open house? Please. Measure it yourself, and quit trying to cya.
Comment #24 Posted By: Anonymous 03/05/10
Anonymous
do you yourself buddy, the apartment is there, you can request an appointment and bring your architect or your little measuring tape. or are you people just trying to find a way to litigate hoping to make some $$$? I would dobut the due diligence more than the broker..
Comment #25 Posted By: Anonymous 03/05/10
Anonymous
go measure yourself and shut up now
Comment #26 Posted By: Anonymous 03/05/10
Anonymous
If you think this is a problem for apartments, this is NOTHING compared to commercial property or buildings. Best Example: 375 Pearl Street. Verizon overstated the building size by 33% and are now being sued for $53 million. Square feet is very underrated and people talk alot about $$$ but not about the substance of how much is really being purchased.
Comment #27 Posted By: Anonymous 03/05/10
Better brokers should use REBNY measuring standards and say so in their listings. Problem solved. Next up my cure for cancer.
Comment #28 Posted By: 03/05/10
Rich Hamilton
#24 All of my apartments have floorplans with clear measurements which I double check. The Tape measures are so the customer can check me and others. Only once did someone find more tnan a slightly maginal difference, and that was me saying it was 16' when it was 18' (Probably my sloppy handwriting) so I was understating. Read the artical, I am the 'good guy' who told the truth. I can be wrong, but I will never intentionally mislead or lie about my properties. But even if the agent measured, you should still check some if you are concerned. Condos & Coops are also different. Condos are legally lots, you own the walls so they are included per the attorney General, the usable (Interior) number is lower, I tend to estimate this for my customers. In Coops I use the interior numbers only based on the peremeter of the apartment. There is no such thing as a REBNY standard. I also do not include outdoor or sleep lofts (Not stand up) in totals but give them seperately.
Comment #29 Posted By: Rich Hamilton 03/05/10
Anonymous
while you can measure the rooms, I believe that is not it legal to represent the TOTAL sq ft of a coop. can anybody confirm this?
Comment #30 Posted By: Anonymous 03/05/10
Anonymous
This is why the real estate business is SO wretched! Lies lies lies.
Comment #31 Posted By: Anonymous 03/05/10
Anonymous
I find its easier just to measure the inner wall and put the dimension of the rooms on the floor plans in existence. It eliminates confusion. I find more buyers are interested in seeing the apartment when stated in this way
Comment #32 Posted By: Anonymous 03/06/10
Anonymous
Wild West ? WTH are you talking about. Measuring is easy especailly if you know basic math !!
Comment #33 Posted By: Anonymous 03/08/10
Anonymous
...and writing is easy if you know basic spelling
Comment #34 Posted By: Anonymous 03/08/10