December 11, 2018
The square footage for that co-op you’re considering? It’s made up. Even worse, it’s made up by an agent. Co-op square footage is almost always overstated, usually significantly, making comparing units extremely difficult.
With such a crucial piece of listing information useless, how do you successfully navigate the co-op market and compare units?
Table of Contents:
Why Is Co-op Square Footage Unreliable?
How Unreliable Is Co-op Square Footage?
Isn’t Inflating Square Footage Illegal?
How Do Agents Defend Overstated Co-op Square Footage?
How Can I Protect Myself From Inflated Co-op Square Footage?
Co-op square footage is unreliable simply because it was never objectively measured. While condos are required to list an official square footage in the offering plan, that’s not the case for co-ops.
This could be due to the unique structure of co-ops where you don’t technically buy the apartment. You buy the right to live in a specific unit and shares in the building but shares don’t have a square footage.
Whenever you see square footage listed for a co-op, it is someone’s estimate - usually the seller's or their agent's. Obviously a “bigger” apartment is better for each which is why estimates are usually generous to say the least.
Extremely. Almost universally, listed square footage is above any reasonable estimate. Yoreevo’s agents will estimate square footage from the floor plan and usually get 10-20% less than what’s stated.
But it can get way worse.
The inspiration for this post was a listing sent to us by a client earlier this year. She called asking why a unit in the West Village with Hudson River views was asking $1,700 per square foot. We simply replied because it probably wasn’t. Here’s the floor plan:
Pretty big! But how big? You can calculate both the northern and eastern walls are about 40’ long. It’s not a square but it’s pretty close. This exercise doesn’t get much easier than this - 40’ by 40’ gets to 1,600 square feet. It could be 100 or 200 square feet larger but 1,600 in the ballpark. What was it listed as?
2,400 square feet!! 50% larger than our estimate!
With this more realistic square footage, the asking price went from $1,700 per square foot to $2,600. Doesn’t look so cheap anymore!
Not really. While an agent can’t knowingly misrepresent a listing, there’s no “right answer” when it comes to co-op square footage. Remember, it was never officially measured as part of the offering plan. As long as the agent says the square footage is an estimate, they're not making any guarantees. You are also free to make your own estimate, whether from the floor plan or in person.
That’s not a universal rule and agents have been sued for overstating square footage. An agent might have a problem if they were documented saying, “I can’t believe Joe Buyer believes this 500 square foot apartment is actually 750!” Generally though, estimating co-op square footage, even generously, is not against the law.
Unreliable square footage isn’t exclusive to co-ops. Even condos have the problem. In a condo’s offering plan, both the square footage and methodology used need to be disclosed. For example, sometimes square footage includes space in the walls. Not particularly practical but as long as it’s disclosed, it’s allowed.
How can an agent defend a square footage that’s significantly larger than any reasonable estimate?
Most agents simply take the size from a previous listing or what the seller tells them. Most agents aren’t nefarious (although some are - we’re always amused when a listing “grows” with a new agent!).
Realistically, you’re never going to discuss a co-op’s square footage with a listing agent. You won’t get any useful answers. For this reason it’s important to have a buyer’s agent who is experienced detecting such overstatements and conducting a valuation that’s truly apples to apples.
The simplest way to not get tricked by co-op square footage is to ignore it. The next best way is to be very skeptical. If a listing’s price per square foot seems too good to be true, it probably is.
You’ll also become less reliant on square footage as you see more apartments. As soon as you walk into an apartment, you’ll compare it to all the others you’ve seen. Especially for smaller apartments, it doesn’t take a tape measure to realize one apartment is 100 square feet larger than another.
Working with an honest agent is also critical to making an informed decision. Think back to the example above. If an agent only wanted to get a deal done, it would have been very easy to say the apartment is a steal at $1,700 per square foot!
Your agent should also use calculated square footage for valuations. It’s not that complicated (most rooms are rectangles after all) but valuing apartments by “gut” is a little more common than we would like. Without an apples to apples size estimate, it’s impossible to accurately compare listings.
Remember - co-op square footage is only a problem if you rely on it!