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Entry 2308.1 - Calculating Square Footage in Residential Properties, Part 5

“RED FLAGS” and what to do when Reporting Square Footage – Part 5.

As defined in the North Carolina Real Estate Commissions 1999-2000 Update Course, a “red flag” situation exists when there is an error in reported square footage that should be obvious to a reasonably prudent agent showing a dwelling to a prospective buyer.

  • Example 1: A simple rectangular house with 1200 square feet has a reported square footage of 1450 (a 21% error). A reasonably prudent agent should probably recognize this problem when showing the house.

  • Example 2: An average-size house with common design features has a large unfinished room (e.g., an enclosed porch) that was improperly included in the reported square footage. A reasonably prudent agent should probably recognize the square footage error when showing the house.

  • Example 3: During a showing, the agent notices that the listing data shows the dimensions of the living room to be 30' x 15' but the agent or buyer notices that the room appears shorter, and, upon checking, finds the room dimensions to actually be 20' x 15'. This should probably serve as a “red flag” to a reasonably prudent agent, who should check to make sure the error in reported room dimensions is not reflected in the reported square footage for the dwelling.

Corrective Action in “Red Flag” Situations:

The first action to be taken by an agent working with the buyer when he/she encounters a “red flag” situation is to promptly point out the suspected error to both the buyer and the listing agent. The appropriate action for agents to take after that is primarily dictated by their agency status.

The listing agent (and their firm), upon being alerted to the potential problem, must then recheck the reported square footage and correct any error in the information reported. The listing agent should make sure all prospective buyers have the corrected information (this should include current and previous showings of the subject dwelling).

A seller’s subagent working with the buyer may rely on the verified or corrected square footage figure reported by the listing agent after being alerted to the “red flag.” A buyer’s agent, under agency law, has a higher duty to the buyer than does a seller’s subagent working with a buyer. Consequently, it is not sufficient for a buyer’s agent to simply report a suspected problem to the listing agent and then rely on the listing agent’s rechecking of the square footage. Under the Guidelines, when there is a “red flag,” a buyer’s agent must independently measure and calculate the square footage if the buyer has any further interest in the dwelling. The buyer’s agent must then advise the listing agent of any errors he/she finds.

Note: As a practical matter, the agent working with the buyer can frequently find the error very easily and then simply report the problem and the correct square footage to the listing agent and buyer. When it is easy for the agent working with the buyer to personally check the reported square footage, even a seller’s subagent may want to do so prior to contacting the listing agent, especially if the buyer is particularly interested in the property and/or if the agent’s firm listed the property.

I teach a (4) hour NCREC approved CE elective course on the Square Footage Guidelines. Visit our class schedule and register today.

The above does not constitute Legal Advice. Therefore, find a competent attorney for legal advice.


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