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Square Footage Does Not Match Tax Records

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Stinson Bland

Wholesaler from Dallas, TX

Sep 08 '11, 09:36 AM


Hello BP,

I recently put a house under contract and I'm looking to rehab the home. I used the square footage from the tax records to build my offer and rehab estimates. My seller accepted my offer and I was excited about the deal. This house is in a prime neighborhood and I got the house at what I thought was a deep price.

After getting the contract recorded with the city, I took my contractor out to the house and we realized the house is 500 sq. ft. larger than the tax records. We have measured several times and I am positive that the house is larger. This neighborhood sales at an average of $90 a square foot for similar properties... I just found roughly $45K of additional spread on this deal. JACKPOT BABY!!! :D :rock: :wowo: :woohoo:

I literally did a touchdown dance in the front yard after the third measurement. Youtube T.D. Celebrations

Here's my question: How do I get the square footage adjusted with my tax office? I've called the office and I've gotten the run around so far. I plan to go to the office in attempt to get a better response. Would it be best if I got an appraiser to verify the square footage and take that info to the tax office? I'm sure I can figure this out by spending some time at the office but I was hoping someone has had the experience and can give me some insight into a quick solution. In order to help my sale I want the tax records to represent the correct sq. footage. I have roughly 8 weeks to get it corrected before I list the house.

Thanks for any and all help!



Carlos Flores

Real Estate Investor from Dallas, Texas

Sep 08 '11, 09:47 AM


Hey Stinson, didn't you promise me your next wholesale deal???

No, seriously, congratulations! I was hoping to see you dancing in the clip. Another let down. Oh well....



Medium_dreamstime_l_17553651_-_copy_crCarlos Flores, Stronger Communities Alliance, LLC
E-Mail: [email protected]
I pool investor funds together to acquire apartment complexes


Stinson Bland

Wholesaler from Dallas, TX

Sep 08 '11, 10:50 AM


Carlos,

You're welcome to have this deal but I'm sure you wouldn't like the price... I'd have to get a very large assignment fee to let it go. I've considered wholesaling the property via a double close but I'm now emotionally tide to the deal and I doubt anyone would pay the price I'd ask for it.

I'm sure I'll do the dance again at the closing table once the house sells... I'll get it recorded. lol.



Steve M.

Real Estate Investor from Statesville, North Carolina

Sep 08 '11, 11:02 AM


Hey Stinson, newbie here. Every county is different, one, but in my county I believe we have to do a voluntary assessment to get anything like that changed. Could be nobody wants to do that, 'cause we all know what that means. Yep, more value, more taxes.

My curiosity in this is if it really matters? Maybe it does in your area, but in mine it's kind of "beware of sf and do your own measurement to confirm" much like you've done. I've actually seen REO listings be higher by 200 SF + what the house actually is. Now, it's okay if your under, but a listing agent should know better IMO to be off by that much (this is as of last week and I did measurements myself).

Obviously any independent opinion you can get in writing further solidifies your claim when you go to sell it and list it. With that much extra in your pocket, why not? :)



Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Sep 08 '11, 11:09 AM
4 votes


First, even if properties average $90 per square foot, your house being bigger than another by 500 foot WILL NOT add $45K to the value. Appraisers will apply an adjustment factor that will be significantly less than the per square foot average. The extra size will add value, but it will be closer to $20K than $45K. Houses that are larger than average will sell for lower $/sf than average. Vice versa for smaller than average houses.

The problem may well be the work that created this extra footage was unpermitted. If someone slapped an addition on without permits, it may not add much value at all. Some locations will make you jump through hoops to get it properly permitted.



Jon Holdman, Flying Phoenix LLC


Mike V. Donor

Rehabber from St. Louis, Missouri

Sep 08 '11, 11:17 AM


Is there a finished attic? I had a 400+ sq ft finished attic that only counted for 150 sq ft due to ceiling height limitations. I believe they only counted area that had at least 7' ceiling height



Stinson Bland

Wholesaler from Dallas, TX

Sep 08 '11, 01:53 PM


Jon,

I appreciate your insight but you're making assumptions that are incorrect. The house has not had any additions; it was built a 4/2/2 and is still under average size for the neighborhood. The average home in the area is 2000+ sq. ft. Here is the info on how I came up with my ARV:

Subject: Oversized corner lot with rear facing garage. Great curb appeal that has mature landscaping with 40 year old trees and crape myrtles.
Size: 1850+
Condition: Grade A+ Rehab - top to bottom
Built: 1976
Price Per: $90.00+
Targeted Sale Price: $170K
My original ARV was $120K+

Recently Sold 1
Size: 1906
Condition: Updated (paint, floor, fixtures)
Built: 1974
Price Per: $89
DOM: 103

Recently Sold 2
Size: 1804
Condition: Grade A Rehab (everything)
Built: 1974
Price Per: $102
DOM: 35

Recently Sold 3
Size: 2016
Condition: Basic Rehab (paint, floor, fixtures, bathrooms)
Built: 1975
Price Per: $91
DOM: 42

Recently Sold 4
Size: 1706
Condition: Rehab (paint, floor, fixtures, bathrooms, kitchen)
Built: 1976
Price Per: $93
DOM: 3

Recently Sold 5
Size: 2079
Condition: Maintained (As-Is)
Built: 1975
Price Per: $85
DOM: 361

Recently Sold 6
Size: 2381
Condition: Well Maintained
Built: 1974
Price Per: $78
DOM: 103

Recently Sold 7
Size: 2810
Condition: Well Maintained (slightly updates: floors, paint)
Built: 1974
Price Per: $75
DOM: 165

After looking at what's being offered as of yesterday in the neighborhood, I am sure that we'll have one of the nicest houses in the area. The current price per square foot on rehabbed homes that are currently listed in the neighborhood: $91, $88, $97, $108, $95, and $93.

What would you call the ARV after looking at those numbers? I think I'm safe saying I can get $90+ a square foot after I rehab the entire house.

Mike,

No addition... original build.



Scott Hubbard

Rehabber from Tucson, Arizona

Sep 08 '11, 02:32 PM


Originally posted by Stinson Bland:
Hello BP,

Here's my question: How do I get the square footage adjusted with my tax office? I've called the office and I've gotten the run around so far. I plan to go to the office in attempt to get a better response. Would it be best if I got an appraiser to verify the square footage and take that info to the tax office? I'm sure I can figure this out by spending some time at the office but I was hoping someone has had the experience and can give me some insight into a quick solution. In order to help my sale I want the tax records to represent the correct sq. footage. I have roughly 8 weeks to get it corrected before I list the house.

Thanks for any and all help!

1. Consider this, why would you go through that? You can put whatever square footage you want on the listing. Personally, I would call an appraiser, to make sure he agrees with your findings. If the appraisal report supports your findings then use that as your source for the square footage listed in the MLS.

2. Eventually, the buyer's appraiser will make an independent determination of the square footage too, so you do not necessarily need to get it corrected with the county tax assessor since appraisers do not rely on their information anyway.

3. Filing a correction with the tax appraiser will mean higher property taxes for your buyer. This is a value add in my book especially if the buyer is seeking financing.

4. Someone may be responsible for lost property taxes and it may be you. A stupid move and a risk not worth taking in my book. Let the next buyer worry about that.

If you have read the above and still want to proceed, then go down to your county assessor's office with an appraisal report in hand and a blank check for applicable back taxes.

Good Luck!



Justin S. Donor

Real Estate Investor from Chandler, Arizona

Sep 08 '11, 02:36 PM


If all work is permitted, then I would have an architect draw it up, make sure you are within all the setbacks, all rooms are considered living areas, and your lot coverage areas are not being violated.



Medium_rezamp_buscard_whiteJustin S., Rezamp, LLC
E-Mail: [email protected]
Telephone: 4806780446
Website: http://ReZamp.com
FREE Powerful software that discovers real estate deals- Available in AZ, TX, NV, FL, IN


Edgar B.

Residential Real Estate Broker from la mirada, California

Sep 08 '11, 03:20 PM


Please make sure not to count the garrage as part of your s.f. #'s, it isn't living area, now when you resale that appraiser will meassure and if it doesn't match with county records, he will either give it value and ask for permits or NO value given, i would go to city building department and only ask for a copy of any and all existing permits get a copy and read them, if you find the permit for the added S.F. great and provide to appraiser before he goes to property as if you don't he will only see what is on tax records, if you are flipping there may require 2 appraisals and that will go to reviewer and underwriter any of these can ask for permit or no value will be given, that will depend on lender some are ok and will fund most will cause problems.



Stinson Bland

Wholesaler from Dallas, TX

Sep 08 '11, 04:06 PM


Scott,

You make some great points... I'll get and appraisal and use the incorrect tax records as another selling feature. Who doesn't like to pay less in taxes?

Edgar and Justin,

I am not considering the garage into the square footage and there is no additional add-on. The entire house is original construction (no additional permits needed) and the tax records are simply incorrect.

Thanks for the help guys!



Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Sep 08 '11, 05:14 PM


You've done a different analysis than I thought when you said you had the extra sq.ft. I read into what you wrote that you were just tacking on the extra sq.ft. at the sales price p.s.f. when what you're really doing is comping this vs. similar properties. Given that, your analysis looks correct.

That said, have you looked at these comps? Does yours seem comparable in size? Around here, what really counts in ground floor footage. Second floor is worth quite a bit less and basement is worth very little. Where I got screwed up on one deal was with tri-levels. For some reason, all the footage in those is counted as "ground floor", so you have to avoid trying to compare those to other styles. I learned the hard way you really have to compare only the exact style.

But if you're comparing to the same style and comparing the different types of footage, then you're found an error you can turn into cash. Congrats!



Jon Holdman, Flying Phoenix LLC


Stinson Bland

Wholesaler from Dallas, TX

Sep 09 '11, 01:06 PM


Hey Jon,

Thanks for confirming my thought process. I drove all of the comps and they're all old (mid 70's) Fox and Jacobs homes. You honestly can't tell the difference from one to next. They're all relatively the same size and the exact style.

I spent the day at the house with contractors and I'm extremely excited about our rehab plans. I'm sure we'll sell in the matter of a couple weeks when the project is completed.

I also have an appraiser going out to the house on Tuesday to confirm the square footage.

Thanks again for the guidence. BP Nation Rocks!



Chris Colvard

Wholesaler from Dallas, Texas

Sep 09 '11, 01:17 PM


Stinson:

Any taxing jurisdiction will be happy to increase your taxes on this property.

If it's in Dallas it will probably take an hour at DCAD off Stemmons.

Set appointment and discuss over the phone. Go down with facts.

Done deal.



Kendra T.

Elk Grove, California

Sep 16 '11, 12:49 PM


If there are some discrepancy between what you measured and what the county has on file, you might want to check to see if there has been any additions to the property (works without permits). I've come across several cases like this already.



Stinson Bland

Wholesaler from Dallas, TX

Sep 27 '11, 03:15 PM


I'm proud to say that I was able to wholesale this deal in less than 4 hours and I made a really nice assignment fee (2nd largest ever). I sold the house to a good friend of mine that's a fulltime rehabber. He is a third time buyer and was fully aware of my original purchase price.



David Wedemire

Real Estate Investor from Bellingham, Washington

Sep 27 '11, 03:32 PM


Well Stinson, issue resolved with not much additional work. Congrats on the deal.



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