Recently, one of our clients entered into a contract to purchase a large property from a seller that was selling by owner. The house was a bit pricey, but it really fit what our client was looking for. He was borrowing money, so an appraisal was ordered on the property. Much to everyone’s surprise, the appraisal indicated that there were 400 less square feet than was disclosed by the seller in the listing.
Unfortunately, this is not an uncommon occurrence. Failure to make sure you are double checking the square footage of a property that you are buying is critical to your success in real estate investing. Buying a property based on over-inflated square footage is a sure way to lose money.
In some instances, this can work to your favor if you are attempting to flip a home. One prolific flipper indicated that he finds that one out of every four homes he flips reports the square footage lower than the home really has. If you are able to show that a home has 200 more square feet than shows up in the property appraiser’s office and you can convince the property appraiser of that fact, that would equal an additional $40,000 to your bottom line if the home is selling at $200 per square foot. That would be a huge boon to your profitability.
Be sure to do your own measurements with respect to square footage. It will make a huge difference in your bottom line.