Overstating the size of a home or condo is common. Make sure it does not happen to you.
by Romana King
March 14, 2016
Would you be surprised to learn that your 2,500 square-foot home was missing a room? That’s essentially what happened to Calgary, Alta., homeowner, Pam Whelan. And it may have cost her tens of thousands of dollars. Almost nine years after she bought the home, she took her realtor to court. She recently told the CBC how it happened:
When Pam Whelan purchased her Calgary home in 2007, she thought it was ideal — a good location with acreage, nice layout and reasonably priced at $800,000 in a hot housing market. She also thought the living space on the main floor totalled 2,500 square feet, but on that point she was wrong. Whelan learned her home was much smaller when she was thinking about selling it five years later. It turned out the listing realtor had changed the square footage, increasing it by 25 per cent, to 2,580 from 2,094 square feet.
Whelan’s situation isn’t unique. In Canada there is no standard for what’s included when measuring a home. In some cases, the square footage is calculated based on the length and width of a home as measured by its outside walls. Sometimes it’s calculated by adding up the size of each room in the home to find the total living space (whether you omit bathrooms and hallways can change market to market). Just about the only thing most everyone agrees on is that basement (or sub-grade) living space should not be included. As a result, this has created a patchwork of inaccurate and often misrepresented home sizes across the country. It’s a problem that also impacts condo and new build homes, where the cost-per-square-foot is often the de facto method for comparing one unit to another. Even though resale homes rarely use square footage costs that doesn’t mean size isn’t an important factor when pricing a home. As Whelan learned the hard way, our default perception is that larger homes should command higher prices.
In the real estate industry, caveat emptor is the standard response by those defending this patchwork process. It’s a response that’s supported by one sentence fragment in the sale document (known as the Purchase of Sale Agreement). It states: “This information may not be accurate.”
Still, in reply to the rising number of complaints about size misrepresentation, the Canadian Real Estate Association (CREA), which represents realtors and brokers across the country, has admitted that it’s working to develop national measurement standards but only for commercial listings. There are still no plans to standardize measurements for residential listings.
Given that the onus is on the buyer to verify the information, here’s a few ways to protect yourself.
One way to protect yourself is to document your square footage requests. Vancouver real estate lawyer and consumer advocate, Ron Usher, suggests that buyers send their real estate agent an email outlining everything they are looking for in a home or condo and include your desired square footage. By sending an email, you’re documenting your request and this can be useful should there be a discrepancy later on.
Usher also suggests crossing out the stated square footage range on a Sales Contract and write in the square footage you expect (typically, based on the square footage reported in the listing). For instance, if a condo is listed and the square footage is stated between 900 and 1,000 square feet, cross this out and write: 950 square feet. Because any change in the Sales Document must be acknowledged by the other party, this forces the seller to acknowledge that this is the correct square footage of the condo (by initialling the change). If, however, there is a discrepancy in the future, you have more legal recourse to support your claim if there was misrepresentation. This strategy also works for new build homes and resale homes.
Don’t rely on building plans
Finding out your condo is actually 560 square feet—not the 700 square feet that was listed in the brochure—is “not unusual,” says Martin Rumack, a real estate lawyer with more than three decades of experience in new build construction. “Condo sales staff will often include balcony or terrace measurements as part of the total square footage. New home sales staff will provide square footage based on measurements of external walls. You can’t rely on their verbal assurances, on the floor models, or on the sale pitch or brochure.”
Worse, the builder has the discretion to change an image or floor plan or layout, and “you have no say,” explains Rumack. He suggests asking for a breakdown of room sizes and plan details, and to “get it in writing.” That way if there’s a substantial difference between what you’re sold and what you get, you have a written trail that you can use to either negotiate a price reduction or try to get out of the deal.
Take a tape measure
Right or wrong, the onus is on you the buyer to confirm measurements, so do just that. Take a tape measure and measure every single room. Write down each measurement for each room on a piece of paper (go ahead and use the listing itself) and then include that in the Sales Agreement documentation.
Pay for a professional assessment
Another option is to pay for a professional measuring company. While these outfits normally measure commercial units—which rely heavily on costs-per-square-foot—that doesn’t mean they can’t use their knowledge and skills to size up your home. Costs start at $100, but the report could be used to help negotiate a reduction in the sale price, should a significant size difference be be found. (Simply Google “professional measuring” and a number of reputable companies should pop up.)
Negotiate a settlement
If there are differences between what is listed and what the rooms actually measure, don’t be afraid to go back into negotiations. Just because there was a misrepresentation doesn’t mean the seller or their agent is trying to pull a fast one: Many errors occur accidentally and are then passed on from one transaction to the next. By providing evidence of discrepancies, you will not only set the record straight but you also open up an opportunity to get a reduction in price. If you’re getting less, you should pay less.
For Whelan, the results were less than gratifying. Despite lodging a complaint against the listing realtor, and launching a court case against her own realtor, Whelan ended up selling her home for $775,000.