How to tubing a out cost per square foot when SF is not accurate

[Mark Bastarache]

I'm considering buying a property in a highly desirable beach community on Cape Cod. The owner has the property listed at 500 ft.² more than it actually is because they are counting an attic that has three mattresses on the floor and it is an attic staircase, not a staircase to code, but the town has assessed and is taxing it at that square footage. I believe the house is significantly overpriced as a result, but it is in an area where you're typically paying for location and land more than just square footage and condition of property. How should I think about this and considering my offer?

[Brad S.]

It's not just about "livable" sf, it should be "legal" sf. Meaning, legally permissible per zoning and building standards and permitted as such, per local zoning/building codes and inspections, etc.

I am a longtime appraiser and broker, but no where near the Cape area. But no matter, if the area is not legal living area, than it isn't part of the main sf. It still may have value, but that is up to the market and @Heath Coker would be better at telling you what potential market value that area may have. Also, these situations sometimes present good opportunities, if you can get those areas to count as legal sf after purchasing at a discount.

Also, I used to be a local deputy assessor, so I have some insight into assessing as well. I believe most areas do it relatively similar, so, on that note, I would never take what the county reports as 100% legal gla (gross living area). Those are not necessarily the same thing. As an assessor, I was taught to assess what I see when I was out in the field and put a use code based on the "use" I observed, not necessarily the legally permissible use, etc. Therefore, whenever I do a local deal, I typically go out and measure it myself and verify the actual permit records, if possible, to know exactly what I am buying. 

That said, if they are marketing it with that additional 500sf and you like the deal based on that, I would make the contract contingent on the property legally being that size and built to code, with permits, etc. Then when you get/find confirmation that the 500sf isn't legal sf, you can attempt to negotiate and see if they are willing to budge. They may not be, but either way, they are now obligated to disclose any facts uncovered, to new buyers. 

Is this a FSBO or is there an agent involved? If it's a FSBO, you may want to inform them of their duty of disclosing, when you find out the info.