Seller and buyer have come to a resolution.
As advised last week I had a unique situation. While representing a buyer for a condo in Denver I was perplexed concerning the actual size of the unit as follows:
- The MLS/Listing Broker advised the unit was 1,080 SF*
- The Assessors Office advised the unit was 994 SF
- An appraiser I use for measuring advised 975 SF
*The 1,080 SF measurement was off a valuation appraisal completed a few months prior.
The difference between my appraisers measurements and the marketing materials was 106 SF. While the number does not sound large at $515 PSF the value of the difference exceeded $50,000! In addition 100 SF equals a 10’ x 10’ room or potentially a 2nd bedroom.
Some background, seller and buyer agreed to transact at a PSF of $508.78 based on the 1,080 SF per the listing.
The resolution: an independent appraiser was hired, his measurement 1,026 SF.
After some back and forth between seller and buyer (my client) the final amount concerning the sale will be $520 PSF. The negotiation and final sales price was a fair compromise between seller and buyer.
Yes my buyer is paying slightly more on a PSF basis however the price is based on the revised downward size. The seller is divesting of a unit that is actually smaller than they believed however on a PSF basis; securing a price that is in-line with their original ask. Thus I believe will be a win-win for all at the closing table.
The message here is this, the Square Footage Disclosure in Colorado actually advises one to consider getting their own independent measurements. From experience builders plans and actual measurements can vary. Assessors while generally connect can be off by 10% in either direction. Independent appraisers can come up with different numbers even though technically using the same standards for measurement. The following is a screen shot of the text from the Square Footage Disclosure used in Colorado:
Thus if in doubt laser measuring devices are inexpensive and I would strongly suggest hiring an independent appraiser that both parties can agree on. In a marketplace where $500 PSF can be the norm the reality is every square foot counts. While the phenomenon is new to Denver, in major cities like New York, Los Angeles, San Francisco and others were PSF exceeds four figures on average appraiser measurements are nothing new and are sometimes added as a contingency in the sales contract.
At the end of the day both parties are satisfied. My buyers looked at many properties and this unit met all their checkboxes. The seller while selling a slightly smaller condo is actually receiving more on a PSF basis than his original asking price. Thus a win-win for all.
Next week why negative interest rates are detrimental to real estate.