BiggerPockets

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,

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.

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,

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.

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.

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!

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!

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.

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