Understanding the significance of a home’s accurate square footage, you might be interested in leveraging these inconsistencies to your financial advantage. When you invest in a home that’s been listed with incorrect square footage, there could be a potential for profit.
All home buyers are essentially real estate investors, perhaps without even realizing it. While I often emphasize buying a property that fits your lifestyle first, it doesn’t mean that financial returns should be ignored.
I’ve been inspired to write this post after uncovering an opportunity to potentially earn up to $260,000. This profit can arise from mere inattention to detail by a real estate listing agent.
Poor listing agents might cost sellers a lot, while a good agent, along with an observant buyer, can make a fortune.
Earning from Homes Listed with Wrong Square Footage
Real estate investing offers unique opportunities to find inconsistencies, which is why I prefer it over stocks. Through diligent prospecting and careful negotiation, you can unearth valuable deals. This is something that cannot be done with stocks, where you cannot influence the share price.
Here’s a guideline on how to capitalize on homes with incorrect square footage. When you notice opportunities in real estate, it’s worth pursuing.
1) Identifying homes with inconsistent square footage
Official square footage is what’s recorded in the tax records from the assessor’s office. Most homes are marketed with square footage equal to or higher than the official data. You need to search for exceptions.
Why would a home be marketed with less square footage? Often, it’s the result of negligence or ignorance on the part of the listing agent and seller. Missing the discrepancy might happen due to your busy life and reliance on the agent. But remember, details are crucial!
Listing agents might rely on the latest remodel’s architectural drawings, which, if approved by inspectors, seem trustworthy. But they must also compare these figures to the county assessor’s office data. Any significant discrepancy (10% or more) should lead to a remeasurement. Errors are likely in such cases.
2) Buyer’s responsibility to check
The bigger the discrepancy, the greater the potential profit. So, compare the marketed and recorded square footage for as many homes as possible. Your local Office Of The Assessor-Recorder can be a valuable resource.
Larger homes make it harder to notice the difference in square footage. If you wish to maximize your profit based on this, look for the largest homes.
Example: Imagine a 10,000-square-foot mansion marketed as 9,000 square feet. If the official measurement is 10,000 square feet, you have a 1,000-square-foot advantage. With a neighborhood average of $2,000 per square foot, you stand to make up to $2 million!
Even small discrepancies can be profitable. A 100-square-foot difference in a smaller home, at an average price of $500 per square foot, could result in $50,000 profit.
3) Complete the purchase after thorough verification
Once you’ve confirmed that the livable square footage exceeds the marketed square footage, you can proceed with the purchase. Get the property measured and appraised and complete the sale after addressing other contingencies.
If you decide to sell, list the accurate square footage from the county assessor’s office. Documents of the floor plan and measurements from an independent appraiser or architect (if remodeling was done) can also be provided.
Finding such discrepancies is a bonus, not the primary reason to buy a home. The focus should always be on affordability and improving life quality. Financial projections, market analysis, and not overstretching your budget are essential.
Remember, buying a house with more square footage than advertised is an additional benefit. This might even give you a buffer if home prices decrease after your purchase.
Conclusion
While emotional aspects often guide home purchases, as a smart Financial Samurai, you should also seize opportunities from discrepancies. These two approaches can be harmonized!
Some homes might not list square footage, inviting scrutiny, especially if there’s unpermitted space that could be considered livable. Transparency from sellers about any issues will help streamline the selling process.
Whether buying or selling, this article aims to empower you. Buyers can find new ways to buy with confidence, and sellers can avoid mispricing their homes due to inexperienced agents. Proper pricing is vital in real estate transactions.
Always pay attention to details. Doing more than your counterpart could lead to substantial financial gains.
