Home measurement and floor-plan companies are spreading like wildfire across
the country. They are the way of the future in the real estate business and the
MLS. The ads are enticing and explain how agents will sell homes faster and make
more money by including these services as a regular part of their marketing plan.
However, these ads are a little different. They are attracting more and more
attention because they actually deliver what they promise.
The results are consistent, regardless of the market. In this ever-changing online
marketplace, everyone is looking for the best visual tools; what makes them stand
out from the crowd. If you are a homeowner getting ready to put your property
on the market, when you see these websites with the outstanding graphics and
detailed floor plans, you are instantly drawn to the websites and the Realtors® that provide them. The images are a great example of innovative marketing. If you are a Buyer shopping for a new home, you are likely to spend more time at
sites that display this higher level of detail. Buyers look at specific properties because of the details available on the internet. And, for listing Agents, once these plans are online, they work for you 24 hours a day - 7 days a week; increasing the exposure of your listings and your company.
These images offer numerous benefits. Buyers can refer to the floor-plan graphics anytime they have a question about the house. The graphics help the potential buyers "move-in the house” mentally. These measurement and floor plan services are getting homes sold quicker and for a higher price. That’s a hard to beat combination in today’s market. People feel like they "know" the house before they ever walk in the door. And, after they’ve seen the property in person, buyers can use the plans to place furniture, make decorating decisions, share their ideas with their family, and to better compare homes.
Floor-plans make listings stand out and provide buyers with valuable information they need to make purchase decisions. The sellers are impressed; the buyers are appreciative. Use of these services adds credibility to your professional image. They also add a strong new visual tool to your marketing plan. While video tours definitely provide an important graphic tool, this is a new weapon for your marketing arsenal.
The actual floor plans allow potential buyers a functional tool to use in the home buying decision. Instead of just watching a video or looking at a slide show, consumers can print the floor plan, get out their pencil, and turn this “plan” into their new home. This new generation of software can bring the sketch to life, making it much more functional than those of the past. Sketches can easily be magnified and photos embedded in each room. Customers can even figure out if grandma’s corner cupboard will fit in the dining room or where the new flat-screen works the best; the possibilities are endless.
Floor plans inspire creativity and make the home shopping process more personal. These services will change the future of buying and selling real estate.
Now let’s talk about another benefit these services are bringing to the industry. In the real estate business, we often tend to treat “square footage” like a “four-letter word.” Many states have “non-disclosure” policies and square footage details are not listed in MLS or discussed in public, at least not by agents. And, with no nationally mandated measurement standard or industry-accepted disclosure forms, providing square footage details can be like walking a tight-rope with a bottomless pit below.
In markets where MLS does (or does not) offer any square footage details, buyers still want to know the size of the home. It’s one of the top five buyer questions in every market. Even if agents don’t offer it, they will typically spend time explaining why not. Regardless of how the real estate industry addresses this topic, the “size” question has been a custom for most of the last century and is not likely to change anytime soon. Realtors® are teetering on a slippery balance beam and it’s up to them to decide; if they, as an industry, want to move further away from this topic or face it head on. And, if they do face it, what’s the best way? Any square footage discussion brings up the issue of providing accurate CMA’s, appraisals, and the “quality” of home values. Square footage, while far from a perfect valuation system, does provide a logical method of comparison.
When all the other property elements are equal (location, age, quality, etc.) the size of a home determines the utility and value of that difference in space.
There is a difference in the cost to create this space and a difference in its contributory value in the marketplace. In CMA’s and appraisals, it is viewed by most professionals as a necessary ingredient for fairly comparing and pricing residential real estate.
The Appraisal Foundation and the Federal Government require appraisers to compare properties based on a specific square footage number. It’s not an optional field, but a federally mandated part of every appraisal form. And, the main source of that information for most appraisers is the MLS. The MLS information system was originally designed to report more accurate property details. MLS was meant to reduce the use of the (often inaccurate) information contained in local tax records. If Realtors® don’t provide this information, they are contributing to the growing problem of low appraisals. If appraisers depend of the square footage details listed in public records, there will be errors in their reports - errors that may very well cause a low appraisal. Whether you like this subject or not, if you look at the books and videos on creating CMA’s published by most major real estate educators, it doesn’t take long to find the all-powerful (and very simplistic) formula: price-per-square-foot. So, on one hand many areas say square footage is not that important and they will not provide it; and on the other hand, that’s how the industry’s leading experts teach agents to calculate home values. They don’t want to provide specific numbers, but they do want to use someone else’s numbers when they calculate home prices (and just hope the numbers are close – they are NOT). The square footage fairy does NOT work for the local tax department.
Ask any appraiser about the differences in square footage information; discrepancies between what they personally measure vs. the numbers listed in the local tax records. And sometimes, there’s three different numbers between the MLS, tax records, and what the appraiser calculates. Change the square footage number in your price-per-square-foot formula and you just changed the value. The errors in local tax records are very real and they influence home values. While this is obviously a controversial subject, the solution may be right in front of us.
Let’s look at the big picture:
A.The real estate industry does NOT mandate any national measurement standard and does NOT provide licensees with any square footage disclosure forms. The industry offers no courses or books on teaching the art of measuring one of the most basic components of the real estate industry. All the components of a single-family home (windows, doors, wood, nails, electrical, plumbing, HVAC, flooring, etc.) are measured by a national or internationally recognized measurement standard. However, once joined together to form a home, there is no universal standard for counting the space. B.Since the real estate industry has no nationally mandated standard, every time an Agent provides any square footage total, they are taking a giant liability risk. Regardless of their source of the square footage data or their disclosure method; if they list the number, they are responsible for its accuracy.
While there’s no easy answer to this problem, there is a new option filled with possibilities. Along come these new “home measurement and floor-plan” companies, and they may actually serve multiples purposes (all of which help agents, appraisers, lenders, insurance companies, and consumers). These services provide a golden opportunity.
Real estate agents can’t be experts in every field and they need to better define their role. It’s okay to call other professionals to help guide clients through different steps of the home-buying/selling process. By adding an expert in measuring square footage to the process, it helps to confirm the size and value early in the process and assures no surprises later on, like when the appraisal comes in. In too many areas, square footage is a problem; a problem which should be addressed by specialist. Whether provided by a licensed appraiser or a home measurement and floor-plan service, the service should come complete with a specific square footage total and a proper disclosure form for all parties to sign. Why should measuring Square Footage be any different than the rest of the services Realtors® utilize? Real estate agents already have enough liability issues to deal with.
When you bought your personal home, did you ask about the size? Most of us do. We expect to know our home’s size. It helps us to visualize, compare, and create our own perception of value. Don’t consumers deserve to know the accurate size of their homes? It’s just the way we’ve all been taught to view value. So, what’s the answer? The solution may be knocking on our doors right now, and could change this “problem” into a “positive” for the real estate industry.
In the case of the HVCC, an entire industry (Appraisal Management Companies) were brought to prominence by the stoke of the government pen. In the real estate industry, these new home measurement and floor-plan companies are growing to prominence; not because of any government intervention, but because of the free market. That’s the way America is supposed to work. These companies are growing by leaps and bounds, currently without any form of regulation or oversight. It’s a free-for-all, with a strong degree of competitive spirit driving this product into MLS systems across the country. Consumers are speaking out in favor of these services and so are the agents who have prospered with their use. Right now, it’s a fledgling industry breaking out of the shell. But, this new service offers a win-win situation for everyone involved in the home buying or selling process.
If we make this new breed of professionals an accepted part of the home buying process, then not only can they provide Realtors® with graphics that attract buyers and help sell homes faster, they can also take some of the liability away from listing Agents. I hope one day these companies will provide floor plans and detailed square footage measurements for every home reported through MLS (good timing to go along with the Realtors Property Resource (RPR). And, that’s exactly what’s happening in many markets.
Why not create a new and independent industry to assume the creation of and the responsibility for, calculating residential square footage? A new profession that could be uniformly trained and licensed to provide a new level of professionalism in measuring residential square footage. It’s a win-win situation for everyone involved. If these companies are coming anyway, why not take advantage of the opportunity and establish the new service industry that the real estate profession has needed for so very long. A newly formed business model; licensed and insured. If there is ever a question or problem with square footage, you turn to the expert. Those that get into the business will make sure they take the time to do the job the right way.
They should have a set of professional guidelines and ethics similar to that of Realtors® and appraisers. The real estate industry, the appraisal industry, the insurance industry, and the mortgage lending industry will dramatically improve. Consumer protection will rise dramatically. The states get to increase revenues with licensing and annual business fees, the profession adds credibility to this growing industry, agents get one reduction in liability; and consumers get to know an accurate, nationally mandated method of measurement was used to calculate the size of their home.
How many jobs can a Realtor® be an expert at?
•Home Inspection •Pest Inspection •Staging •Appraisal •Title Insurance •Home Insurance •Legal Advice •Schools •Taxes •Renovations and Repairs •Square Footage
All of these services are part of the “team” of professionals that help consumers with their single, largest, lifetime purchase. These new companies fill a void in the marketplace. Perhaps under the Realtor® umbrella, this new home measurement and floor-plan niche can be trained and tested by the National Association of Realtors®; and then each state can require their own exam, regulations, and licensing. Such an important service to consumers must be organized and guided to best serve the real estate industry, and to help maintain the highest level of consumer protection within the home-buying process.
Better property information means better home valuations. The future starts with the very first step in the valuation process; square footage.