Transcript of Video
Okay. So in this video we're going to help out buyers and a lot of sellers in understanding what counts for square footage. That's the question I usually get asked, “what counts”. The answer is it all counts, but it doesn't count the same. On the buyer end, which is where we have most of these conversations, buyers are worried that they are paying too much for a particular property because the dollar per square foot is high. Well, there are reasons why the dollars per square foot can be high relative to other properties, because buyers don't just look at whatever the number is in either public record or on the MLS sheet and then make a decision that the price should be, you know based on the dollar average dollars per square foot of the town's, that’s not how they make the decision.
They make the decision based on how useful house A is versus house B and if house B got this price and House A is more useful, they pay more. If it's less useful, they pay less. And square footage plays into those kinds of things. I say this all the time, buyers are pretty smart. They pay for utility. They don't pay for the raw square footage number, they pay for utility. Some of them do pay for the square footage number, and a lot of times when they do that, they're making a mistake, but with a little bit of practice, you can make much better decisions about this in understanding how square footage can be different. Most people do understand that square footage is correlated with price, but it's understanding that the square footage is different. So in going to the public record to figure out the square footage to see “what counts” isn't going to help you because as the decades have gone on towns have tried to capture square footage, which they try to do accurately for tax purposes, but they capture it differently.
And on top of that, a lot of homeowners haven’t exactly helped out the town, because they have finished a basement or they finished the third floor and they won't tell the town. They don't want to get taxed on it. So they try to keep that secret. Now, that's not a good idea. But we're not going to cover that in this video. We're going to leave that alone. Eventually the town is going to figure it out, but even when the town does,they are taking a very rough assessment and what the square footage might be worth at best. And so as a buyer you have to be far more aware of the differences.
The main thing that you need to recognize is that houses that have a lot of square footage, but are less useful are going to get lower dollars per square foot than houses that are highly useful with a really high utility. I'll walk you through some examples here. Most people would not pay the same price for basement square footage that they would for above grade square footage. And the reason is very simple. They're not going to be in the basement very much. We're going to be on the first floor, the second floor every single day. The basement? Maybe on weekends to watch a football game, right? You're not using it the same amount so it's not worth the same amount. Really, this is pretty obvious stuff and buyers sort of intuit that they shouldn't pay the same for finished basement space. So same thing with space that's on the third floor. You have space to get an attic, you know, it's got a roof lines interfering and it's kind of just a funky space, and the stairway comes right up the middle, I mean it's useful. It's nice to have! Nobody's going to say, “well, I don't want the house because the attic is finished. But they're not going to pay the same amount of money that they are for the first and second floor. They're just not! You know, it's bonus space. And bonus space is worth something but it's not worth the same as the space you use everyday.
An outbuilding is another example of that, an outbuilding is a building that's not attached to the house. We don't see this a ton, but when we do, see if they have a nice finished space in an outbuilding, It's not they don't pay the same for because they know. In January and snow storms that are going through, they're not going to use it X number of months a year and because it's not attached to the house it is more difficult to access. You got to go outside and get there. So it's worth us. Tandem rooms which we occasionally find in older houses are when someone is added on a bedroom behind another bedroom. And so the only way to get to the new bedroom is by going through the old bedroom. Well, it's really inconvenient for the person using the front bedroom and because of that, most people don't really like tandem bedrooms, they don't pay the same amount for him. So again, that's going to impact the difference between where the house sells based on the public record square footage, and what the buyer really thinks the square footage is. Some houses have Dead Spaces. A lot of houses that have been added onto without a really good plan, and they have dead spaces and just the rooms that nobody can really figure out what it is that they might use it for. And typically, when those houses sell, buyers don't pay for those rooms because they can't figure out what they're gonna use it for. But some dead space is very useful and the example I have here is mudrooms. I mean, you can't really, you know, spend time in a mudroom, but, in New England, it's a super useful part of the house. So if you have a big expanded mud room in New England, most of the time buyers are more than happy to pay full freight for that room because it's got high utility. This is New England! We wear winter jackets in June and occasionally we wear light jackets in December and the weather is funky here, and having an easily accessible closet with boots and umbrellas and snow gear for everybody in the family, you know, it's useful. It’s a useful thing to have and it keeps you from having to store stuff and it just saves you a lot of Time, and Time Savers worth money. People recognize that. A good mudroom is worth its weight in gold and usually gets top dollar, even though you look at it on a floorplan might be considered a dead space, right ? But there's other spaces in houses that do not have obvious uses to them, and if and if they do have uses, it’s on a much less useful time frame, and they don’t pay the same for them.
It takes a little practice. It's an art, not a science to really figure out what the useful square footage is for a house, but it's not usually the number that if it's a super efficient house, it's going to look expensive but it isn't if it's a really inefficient house. It's going to look cheap, but it may not be.
So the key here for any buyer is you don’t want to over pay, and on the sell side, you want to know which parts of your house are useful or not useful. And that's really what you've got to keep in mind.
That's the overview for today. Hope everyone got something out of that. Remember if you really want to understand what's useful square footage, or not. We're here to help, especially on the buy side. Don't overpay just because you're trying to use a simple metric which is actually quite complicated underneath covers. All right. Have a good one.