It seems every time we go through a growth spurt in a real estate cycle, very bad habits are developed by the market participants. Over the most recent up-tick, if you have refinanced or purchased a residence, there is a high probability the Gross Living Area of your home was improperly identified if the tax record was relied upon. Furthermore, a very high percentage of real estate agents, appraisers, and lenders use the tax record as their source for the GLA. As proof of this statement, I ask you, “Was your house measured the last time it was inspected by an agent or an appraiser?”The text, “Mastering Real Estate Appraisal”, used in the required coursework for real estate brokers and appraisers in Connecticut and many other States around the U.S, identifies Gross Living Area (GLA) to be:
“The above-grade, heated areas of finished space, measured from the exterior walls”. This definition is generally accepted by Federal regulatory agencies, the Appraisal Institute, and the legal profession.
Here is the problem. Real estate agents and appraisers seldom measure a home and then use the corrected number to perform their market analysis or challenge the number reported in the tax record. This is the case in spite of the fact that square footage is the single most-important factor used to calculate the value of a home other than perhaps location. The excuse used is that we are not qualified to measure the residence and make such a calculation. (remember the methodology is taught in required coursework) The reality is that many real estate people are too lazy or uncaring to perform the necessary due diligence. The public deserves better. Agents and appraisers are paid well for their services and their clients deserve to be informed.
Why is the reported GLA for tax purposes frequently wrong?
1. Defined GLA not calculated/reported properly.
2. No access to structure.
3. Unreported improvements.
4. Mistakes go uncorrected.
I am suggesting assessors, appraisers, and real estate agents be required to measure and adopt the same standard for calculating GLA so that the consumer can understand the methodology used to estimate the assessed value/market value of their home.
