the square footage dilemma: REBNY “leads” by protecting brokers, not buyers

leadership? not so much
It’s the day after Election Day* so you will read a lot about Leadership today all over the inter-tubes. But you won’t find any other “pundit” talking today about Leadership in the context of REBNY and one of The Great Irritations In Manhattan Residential Real Estate: square footage. Re-fill your coffee; this is going to be one of those long ones….

Everyone seems to acknowledge that the use of square footage measurements in residential real estate listings is problematic at best, and a bad joke all too frequently. Indeed, REBNY (which bills itself as “the city’s leading real estate trade association”) sent an all-hands memo in September about this important problem, acknowledging the obvious (my bold makes parts even more obvious):

We all know that buyers of apartments and townhouses in New York City often look to the approximate square footage of a property as a measurement for a property’s value. Indeed, often one of the key factors for a buyer in their decision to purchase is a calculation of the cost or price-per-square foot of an apartment or townhouse.

But instead of proposing a solution to help buyers deal with “one of the key factors”, REBNY acted exactly as a self-interested trade association would, and advised its members how to avoid legal liability when quoting square footage. Here is the core of the advice given by REBNY to its members (again, with my bold):

The Board of Directors of the Residential Brokerage Division believes that it is important that all brokers and salespersons make clear to potential purchasers that all square footage measurements that are provided through the RLS are usually just estimates, and are not certified or deemed reliable by either the listing firm or a participating co-broker.  In addition, a buyer determined to have a square footage measurement should consult or retain their own professional, and have that professional explain the methodology for the measurement.  Moreover, all firms should include some sort of disclaimer on the materials they provide to their buyers that all square footage estimates are not to be relied upon, and are certainly not verified or certified accurate by the brokerage firm.

the commercial model, not applied
If REBNY wanted to, this problem could go away. As with many things that might improve the buyer or seller experience at the cost of changing the way agents behave, REBNY seems not especially interested.

Note that REBNY has taken a different approach since 1987 in promulgating guidelines with “definitions and methods as the Standard Method of Floor Measurements in office buildings”. While I have seen commentary on the web that the REBNY commercial standards are not as stringent or as detailed as the accepted 25-page national standard from the Building Owners and Managers Association (such as here, or here) my simple point (for now) is that there is and has been since 1987 a set of written guidelines for measuring commercial space that REBNY is prepared to enforce.

I am going to guess here, and offer the theory that REBNY has such a guideline because it has members on both sides of commercial rentals; even more critically because the many people professionally involved in developing, building, and renting renting commercial space find it useful to have a basis for comparison of commercial space on the basis of size. I.e., it makes life easier for many REBNY members to have “a Standard Method”, especially when dealing with major companies as tenants. As REBNY is fond of pointing out,

The Real Estate Board of New York is the city’s leading real estate trade association

with more than 11,000 members. REBNY represents major commercial and residential

property owners and builders, brokers and managers, banks, financial service

companies, utilities, attorneys, architects, contractors and other individuals and

institutions professionally interested in the City’s real estate.

If the “financial service companies” who are REBNY members include mortgage lenders such as Citibank and Chase, those members often find themselves on the tenant side of major rental negotiations. I am sure they find it useful to compare apples and apples.

opportunity knocked, but REBNY was out
There seem to be four ‘sources’ for square footage numbers I see in listing descriptions:

  1. Offering Plans for coops or condos
  2. actual measurements by agents, architects, or others
  3. city tax records (based on condo Offering Plans??)
  4. some undisclosed ‘estimates’

There are many ways that a consumer-friendly trade organization could go here.

The simplest way (from the broker perspective) would be to say that if you use a number, say where it came from. If you say it is from the Offering Plan, end of story. If you say someone measured it, say so, with a disclaimer that other people might measure the same space and get a (somewhat) different number. If you say there is another basis for the number, identify the basis (with funky shaped lofts, for example, one might say that the total building footprint has been divided among X lofts in proportion to their common charges or maintenance ratios, after deducting for common hallways, stairwells and elevator shafts).

A consumer-friendly trade organization would not do these three things at the same time:

  • acknowledge that the square foot measurement is very important to consumers
  • accept that REBNY members routinely use such numbers
  • but insist when they do that they footnote that consumers may not rely upon them.

Of course there are problems with the measurements given in coop and condo Offering Plans. Not all Offering Plans contain square footage data, and among those that do the methodology is inconsistent. Do they include all interior space from the outside of the exterior walls? Do they exclude structural elements, such as flues, columns, walls? Do they apportion some percentage of common space on the floor (public hallways, stairwells, elevator shafts)?

So perhaps REBNY would avoid that problem by requiring that agents either measure themselves, or pay someone to measure. Forcing agents to do this might provoke mass hysteria among firms, which is why my first suggestion is to offer a choice.

Use the exact Offering Plan number (if there is one), and disclaim that there are issues, and you have satisfied the (new) REBNY standard and are (likely) home free of any legal liability so long as you use the (no doubt, REBNY crafted) nifty disclaimer.

If you want to use a different number, justify it. If you do it yourself, save your drawing and pencil calculations (check the math, twice!). If you pay someone else to do it, save their work.

If (a) you don’t have a number in the Offering Plan, and (b) you don’t want to measure or pay someone to measure (it’s too hard!!), and (c) you don’t have another reasonable basis for estimating, then REBNY should have a rule that you cannot quote a measurement. At all.

Would this system be perfect? Hello??? Of course not. But it would be an improvement.

But won’t this prove that measurements are not standard? Yes, I suppose so. But it is better than at present, when everyone already knows they are not standard and there is a great deal of (warranted) cynicism about where these numbers came from.

it takes a rule
Based on conversations I have had with agents, there are many people who would give the consumer more information (such as, identifying that the apartment that has sold twice before as a “1,200 sq ft” apartment really only measures to “985 sq ft”), but they would be at a competitive disadvantage if other bozo agents marketing the same apartment on a different floor would continue to claim that their listing was “1,200 sq ft”.

So this would take an industry wide rule, to protect the agents who would do the right thing from those agents who use information that is … errr … (trying to be gentle here) … without an apparent basis in fact. Would the brokerage firms be happy to confront the agents who have been claiming “1,200 sq ft” for the 985 square foot apartment? Probably not happy, but they need to see that there is an important customer service here. IMHO

there are contrary views
There are long-time honest agents who market traditional Manhattan apartments who find this whole topic distasteful and/or irrelevant. They believe that the pain caused by these measurements is simply not worth it. For them, and for their sellers and buyers, it is all about the room count. Of course, for such people, they could use the alternative of not quoting a number after (ha!) REBNY adopts the Manhattan Loft Guy Rule.

I have heard such people often enough that I believe that they are sincere and knowledgeable about their market niches. But it is unfathomable to me that one could work with classic Manhattan lofts and not talk about square feet each and every time. Not just unfathomable, but impossible. Personally, I prefer a credible number, especially to the current world in which the incredible numbers corrupt the impact of the reasonable (and sourced!)  numbers.

To read one informed commentator’s opinion on this, which is different from mine, read This Smart Guy from October 20.

to go to school on square feet in Manhattan residential real estate: the True Gotham series
If you’ve stayed with me this far and you really want to see a discussion about measuring space, master blogger Doug Heddings did a video series way back in 2007 with an appraiser (The Miller!, natch), a draftsman, and an architect. Each video is about three minutes, with some overlap from one to the next.

Spoiler alert: the offering plan for the subject unit (which has been combined) added to 1,506 sq ft; the 3 pros measured and got 1,475, 1,506, 1,479 of interior square feet, with the comment that the same person could measure the same space twice and get different measures each time, by a factor of 5 or 10%.

True Gotham video series from October 7 – Nov 1 2007 3+ min each
(I hope I have these in chronological order.)

Wouldn’t it be nice if we could count on our leaders to … you know … lead?
* It is still Election Day in places like Nevada, Colorado and Washington, so I am staying up just a bit longer to see if Reid, Bennet and Murray can hold on in the Senate, but as you read this, I am sure it will be daylight on the day after Election Day.

© Sandy Mattingly 2010


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  1. […] REBNY members don’t get sued by consumers over stuff like this. (See my November 2, 2010, the square footage dilemma: REBNY “leads” by protecting brokers, not buyers.) Sigh […]

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