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When looking for a home to purchase, one of the biggest factors to consider is the square footage. Not only is this a measurement of the size of the home you’ll be buying (especially the size of the rooms themselves—a three-bedroom home that’s 2,000 square feet will feel very different from a three-bedroom home that’s 1,200 square feet), the price per square foot is also the value measurement used when looking at comparable homes when determining your offer. If a house down the block sold for $1,000 per square foot, you can use that number to determine whether the house you’re considering is priced properly.
But this only works if everyone is using the same process to determine square footage in the first place. Many real estate listings are deceptive in this area, and not always intentionally. While it’s obviously in a real estate agent’s interest to make a home look larger, square footage can also be a slippery number to pin down. Different finished areas of the house are valued differently, for example, and distinctions are made between different areas of the house. In order to ensure you’re not overpaying for your home, you need to understand those differences—and do some research.
The first thing to understand is that square footage isn’t a monolith. Different areas of a house are counted differently in appraisals:
The living areas (sometimes called the gross living area) of the home are finished, above-grade areas with permanent heat sources.
The adjusted area is the living area plus a percentage (typically half) of any terrace or balcony or garage spaces.
Total living area (TLA) is the living area plus all of the terrace, balcony, basement, and garage space.
When trying to figure out the comparable cost of homes in your area, you need to know if you’re looking at total area or just living area, because the latter is what matters when determining price per square foot.
Let’s say you want to buy a house for $500,000 that’s listed at 2,000 square feet—a price per square foot of $250. You want to know if that’s a good value, so you look for comparable homes in the area and see that it is—most similar homes sold recently for a similar price per square foot. Great! But then you discover that the home is actually 1,200 square feet of living area plus 800 square feet of other space. The price per square foot is actually closer to $417, which means you might be overpaying for the house—by a lot, depending on how you value those other spaces and other aspects of the house.
Something else to consider: Even finished spaces that are below grade (ground level), like basements, are usually not included in the living area calculation, because they’re usually not included in appraisal values. You might be willing to pay more per square foot for the house because it has a finished basement, but that space is often excluded from the official square-foot calculation. Additionally, any finished area that isn’t accessible from the main living area of the home—like an accessory dwelling unit (ADU) on the property—shouldn’t be included in the home’s official square footage.
There are exactly zero laws governing how square footage is measured—so it’s the buyer’s responsibility to determine or confirm the square footage of the home. While real estate agents are expected to provide accurate information about a property, it’s easy for mistakes to be made mixing up living area with adjusted area, or counting a finished basement as part of the living area even though it’s below grade. That’s because many agents get the square footage information from tax records—which can be inaccurate—or the sellers, who might be misinformed or might not understand what counts as living area and what doesn’t.
The easiest way to determine if the listed square footage of a house is accurate is to go there and measure it. This doesn’t need to be 100% accurate—a few minutes in each space with a laser tape measure will give you a rough idea of the square footage (you can skip the garage and below-grade spaces), and as long as it’s close to what’s in the listing you’re fine to use that number when calculating your offer on the property. You can also hire a licensed appraiser to measure the home professionally, which will give you an accurate measurement and a clear division between living area and adjusted area.
