What can I do if my house is actually smaller than what it was listed as when I bought it?

Question

My wife and I bought our house 2 years ago. It was listed at 1371 sq. ft. (also what the county has on record). Now we are trying to refinance to get out of our arm loan. Come to find out the house is only 1120 sq. ft. and appraises for far less than what we paid and still owe. (about $11,000 less).
There has to be something we can do.
Please help.

My wife and I bought our house 2 years ago. It was listed at 1371 sq ft. We are trying to refi to get out of our arm loan.
Trying for an FHA loan, the appraiser measured the outside dimension.
40x28 ft = 1120 sq ft. These are the dimensions I came up with too.
Now the appraised value is far less than when we bought it (about $11,000 less.)
There must be something we can do.
Please help.

The outside dimensions of the home are 40ft x 28ft = 1120 sq. ft. This is what new appraiser came up with and is also what I came up with.

Answer 1

You can deal with it, and learn to measure the property yourself before you buy next time. If you didn't do your due dilligence when you buy a place, you're out of luck once you own it. Not the answer you wanted to hear, but it's the truth.

Answer 2

When you had the first appraisal, for 1371 sq ft, there should have been a clarification as to whether or not it was "live-able space". If not, I would just chalk this one up to experience when buying a home next time. Be sure that this is stated specifically on the contract. (My husband is very anal about stuff like that; he had measuring tape and calculator in hand! Sometimes I appreciate this... sometimes I think he needs to take a Valium.) Since that was 2 years ago, I'm not sure if there's much you can do now. If these were houses in a new development, you might want to talk to your neighbors and find out if this was something that was done to the rest of them. Could be fodder for a class-action suit. The difference in sq ft, 1371 and 1120, is really big. Because it is in the county's record, the new appraisal smells fishy to me.

Now, the second concern. Who's doing the new appraisal? Is it on behalf of the new lender? Have you made any upgrades/improvements since you first purchased? Ask around and see if you can find out what similar homes are valued at in your area. Try www.ziprealty.com and do a quick search.

Gosh, I wish there was more I could help you with. Best of luck.

Answer 3

When a homes sq/ft is calculated they take the exterior measurements less the garage. This is often referred to as the gross size. The county assessor uses this and most agent fliers will use it with the disclaimer "Buyer to verify" Now comes an appraiser that uses inside sq/ft and his calculation becomes living space or net size. There is always a discrepancy between the two. Floor plans can eat up some, 2x6 walls as opposed to 2x4 can eat up a 33% difference. Theres also warm room and finished sq/ft that can sometimes make such a difference in actual usable sq/ft.
As for the drop in value the room count and condition of your home verses the comps used can cause a slight difference. Your local market may not be as strong as when your last appraisal was done also. An appraisal is merely one persons qualified opinion of value and not usually the real value. Also banks give appraisers a target number to justify so a refi appraisal wont be 100% actual value.

Ammended
I now have a real concern as the appraiser should have used inside sq/ft and would have had an even smaller total.

You might have recourse against misrepresentation on the real estate agents part if there was no "buyer to verify" disclaimer on the ad copy that stated a much larger total. The agent would have been negligent in not pointing out the discrepancy. That was 2 years ago and you have known since the first appraisal so you would need a qualified legal opinion on that. I have never in 20+ years of real estate and lending experience seen an appraiser use the exterior dimensions for sq/ft. The exception being on drive by appraisals that aren't as accurate in many ways besides sq/ft.
I always meet appraiser at the home, and do so to make sure it was an inside home appraisal.

Answer 4

The difference may be totol sq.ft and then actual living space sq. ft. There may have also been a difference in measuring. The actual sq. ft. will be what is listed at the county due to blueprints of the home when built. The estimater for the bank i'm sure just used roll tape or tape measure and calculated each room. The listing sq. ft. will be done from the outside most of the time, and that will be your difference.

Answer 5

It's appraising for less because the market dropped. Why do you assume the new appraisal has the "correct" size listed and county records doesn't. Check some more. Your house has probably been measured quite a few times for various things, I think what the county has on record would be closer to being correct than assuming your new appraiser got it correct.

Answer 6

it's possible the person who appraised your home before you bought it didn't do their job. validating the square footage of the dwelling is one of their primary duties. they may have just taken the info reported by county records & put it directly into their appraisal report. statistically, the info (sq footage, # of rooms, etc.) reported by county records is wrong half the time because it's entered in manually by your average data entry clerks. moving forward, request for a copy of the current appraisal report from your lender. contact the appraiser that did the report & ask how they determined the square footage. explain your concerns to them. this may be enough to get them to come back out and recheck their findings in order to be certain. if their calculations are correct, report your complaint to the real estate appraiser regulatory board for your state:

http://www.appraisalfoundation.org/s_appraisal/doc.asp?CID=14&DID=196

ask them for assistance. they will help you & give you guidance on what you should do. they will most likely open up an investigation of their own. you may want to prepare on getting a lawyer as well since a law suit may be the result.

Answer 7

Was the house not appraised when you first bought it? Why didn't they catch it then? I believe I would get a second opinion. If it still comes up short, you may need to get legal help against whoever did the appraisal 2 years ago. You're talking about nearly a 20% difference.

Answer 8

Do you have a partially finishedd basement? The county records will list this a s finishe living space for tax purposes. Lenders do not recognize below grade living space when they are figuring value. I think this is where your confusion may have come from.
Good luck,
RE Agent,
Remax

Answer 9

That really sucks.....Seems like the county is to blame on this one....Most agents get there information from the tax or county office.....I wish I had an answer for you....