Is Bigger Better? The Fallacy of Square Footage

Some people are great in one job but not in another. Take Matt Eberflus. Wonderful tactician and defensive coordinator. And as you all know if you watched any Thanksgiving football, that Eberflus, the head coach of the Bears at the time of writing this, is a dreadful head coach. His dumbfounded expression of time management as the clock ran out said it all.  Michael Jordan was a great basketball player and a lousy baseball player. Madonna is a good singer, but they say she was let go from Dunkin’ Donuts for supposedly squirting jelly filling on a rude customer. My Dad was an excellent executive in the textile industry but goofed at the AM PM Supermarket. He was tall so they let him put the baby food jars on the top shelf, but he kept pushing them back so far that each jar kept falling and shattering onto the floor in the other aisle.

There is one personality type with a certain brilliant skillset who can be lousy at purchasing a home and we real estate agents salivate when they walk through the door. You’d think it would be the “simpleton”. Not so, as the simpletons are good at listening and end up making savvy purchases. No, the individual who needs a real estate agent most desperately has a high IQ, a superb mind, works in a well-respected profession, and is handsomely paid. According to AI Overview in Google, the person with this skillset is analytical, dependable, has good attention to detail, is a good communicator, creative, displays teamwork, is effective in risk management, and collaborative. The kind of person you’d bring home to Mom.

But there is a rub that AI Overview missed. Sometimes this individual gets stuck on the analytics of numbers.  I’ve seen them look at the floor plan when a gorgeous lake view is in front of them only to be smacked on the head by their spouse to look up. If we open the door and the potential buyer goes straight to the thermostat or garage, I’ll bet the house (pun intended) on what their profession is. And that becomes an issue when it comes to valuation. That’s because this individual at times focuses on the logic and analytics of square footage which often does make sense.  Sometimes though that doesn’t translate. Now, I don’t mean to pick on this profession in particular – plenty of other professions and other personalities do this as well. I’d like to tell you what the profession is… but seeing how we do have to make a living, I’ll let that be a cliffhanger mystery for another day, in case they get sore at me. However, if you are dying to know, send me a guess and I’ll tell you if you are on the mark. Perhaps you will get a holiday gift if you guess correctly. But even if you are cursed with this splendid skillset, don’t feel bad.

At times professional real estate appraisers aren’t so great either.  I blame it on too much focus on living square feet. Living square feet in Florida is defined as square footage under air (conditioning). We are so conditioned to focus on the price per square foot that oftentimes we don’t include or consider other types of square footage.

Luckily, I’m around to help. Here are the 8 Areas of Square Footage Fallacy…

1. Lousy Living Square Feet

I once had a semi-custom home in Mirasol where the owner took the second story loft landing and extended it the entire way throughout the house.  The soaring 20 foot + ceilings were now divided in ½ and created a gigantic amount of extra living square feet. However, the feeling of the house became like a dark dungeon with no light. It had an extra 1500 living square feet and instead it was like I needed to subtract 3,000 square feet to get the true value. Making matters worse, it was a short sale, and I couldn’t get it valued low enough with the appraiser because they had to use living square feet in their calculation.

2. Total Square Feet

The focus sometimes is so much on living square feet that the extras of total square feet that are big benefits including porches, garage spaces, attic spaces, and outdoor pool/patio areas, are forgotten.

3. Lousy Total Square Feet

I once went on a listing appointment in Ranch Colony which I passed on. The owner built an extra garage directly behind the house. It blocked all the light. They wanted more for the extra garage, and I knew the garage needed to be torn down.

4. Lot location

You could have one home where the headlight beams go right through the living room window at night, and no one would put that into a valuation. Premium lot locations like cul-de-sacs and homes away from road noise all should have higher valuations that have nothing to do with living square feet.

5. Exposure

Southern exposure is always going to give you more light inside the house and on the pool, yet there is no extra valuation for it. A good layout or bad layout, no matter what the exposure, should be taken into consideration.

6. Acreage

This can be how the lot is laid out as well as what you can do with it. I had one home on a 2/3 of an acre lot in a typical ¼ acre community but the backyard was so vertical and too much of the extra space was wasted that it didn’t bring much extra value. Another home was 3,000 square feet but was laid out perfectly and very private. It got 30% more than what the Zestimate said it was worth. It wasn’t a fluke either because we had multiple offers.

7. Light

This has to do with exposure but also with how the home was built. If the architect put the window in at proper height and without overhang, a smaller square foot house might have a better valuation. It also can combine with #4, lot location. If a ranch home has a 2-story on either side of the property, light coming through on both sides of the house is going to be absent.

8. Upgrades

Everyone gives credit for upgrades but were the upgrades done in good taste?  And did they over upgrade? I remember one guy wanted more dollars for his home because he put in a urinal. I can tell you that those dollars went down the drain!

Figuring out the real selling price is hard to do as it’s a lot of +/- calculations mixed in with what is happening in real time with the marketplace.  If only there was a way to engineer, it perfectly every time!

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Jeff Lichtenstein, originally from Chicago, got his start in the home furnishings textile business where he traveled over 35 weeks a year selling fabrics. After the family business was sold, Jeff moved to Florida and became a real estate agent. Today he is the owner and broker of Echo Fine Properties, a luxury residential brokerage voted best brokerage of the year. Jeff manages a non-traditional model of real estate that mimics a traditional business model. Echo has 80 agents, an average of one million dollars per transaction and over 500 million in annual sales. Between traveling for work and annual family trips to national parks with his wife and 2 now adult children, Jeff has visited 49 states. He is also one of the few Chicago White Sox fans you’ll ever meet.  Some publications he has been quoted in.

Author of business & leadership book How Making a Sandwich Can Change Your World –  The Amazing Success of the PB&J Strategy – Available to Buy Now!

Feel free to ask him a question directly at jeff@EchoFineProperties.com including a complementary  valuation of your home.