AT&T used to say, “you get what you pay for.” In real estate, you pay for what you get, so it’s important to know what you’re getting, especially when condo shopping. In many markets, including Hawaii, exterior space (balconies) counts towards living space. That means when you buy a 1,000-square-foot condo, the price per square foot is calculated as 1,000 square feet, regardless of whether there’s a 200 square foot balcony included in that 1,000 square feet.
In Dallas, a 1,000 square foot condo means 1,000 square feet under roof that is heated and air-conditioned. The balcony is sorta free or at least not part of the price-setting. In Hawaii, the 200-square-foot balcony is additional space and would be listed as 1,200 square feet. Got it? In Dallas, balconies are generally not counted as chargeable, interior space.
Unless they are.
This is important because selling and purchase prices are determined by what’s going on in the building on a cost-per-square-foot basis. Sure, unit condition, location, views, and floor all factor in, but all buildings trade in a fairly narrow band of dollars per square foot. There aren’t $200 per foot units at Museum Tower nor are there $1,000 per foot units for sale at the Renaissance.
It’s critical to know the measurements of a condo you’re evaluating. Some Realtors in Dallas list a unit’s square footage as including balcony space and then list the property in the same price band as a unit that doesn’t include the balcony in unit square footage.
The buyer gets a smaller unit than they think … and they pay for it. Let’s go back to the 1,000-square-foot unit with a 200 square foot balcony and say it’s in a building where $300 per square foot would be a good selling price. The unit that includes the balcony in the price will be priced at $60,000 more than the identical unit that calculates price based on interior space (the Dallas norm).
Like most data, what’s important is that everyone plays by the same rules. If everyone includes balconies, great. If everyone doesn’t, great too. If there’s a mix, buyers may pay more and sellers may actually get less (because an overpriced unit takes longer to sell).
Solving The Mystery
Check DCAD. Look up the unit and see if the listing square footage matches DCAD. If the balcony has been enclosed, it might be listed with DCAD (but not necessarily). If things still aren’t matching up, compare that square footage with the same units above and below. The same square footage or not? Note that some buildings change floor plates so make sure the one you’re looking at matches.
When you visit the building, look up (or look at Google street view) and see if any balcony has been enclosed. Next, ask the building manager if the unit is in the original configuration.
If between DCAD, looking up, and asking you’re still in the dark, make sure the unit is professionally measured and the square footage calculated. The seller needs to account for why the listing square footage doesn’t match DCAD (not that DCAD is always right, but it’s the best we have).
But it’s not just balconies that can cause square footage discrepancies. Did the unit purchase part of a neighboring unit (making it larger) or sell part of the unit to a neighbor (making it smaller)? Unlike balconies, these reconfigurations are public record if they were done legally. Also, unlike the balcony trickery, the overall price calculation shouldn’t be impacted (because the loss/gain of square footage is public).
The Stoneleigh’s Own Mystery
Back when the building first got approval for construction, the floor plates and unit sizes were filed with DCAD. When the project went bankrupt and was resurrected, the new developer decreased the number of units by making them larger. I’ve been told by listing agents that DCAD doesn’t reflect the new configurations. Some units are larger than DCAD reports while others are smaller.
Owners of units DCAD believes to be smaller have no incentive to correct DCAD as it would increase their taxes. Owners of units DCAD believes are larger don’t want to tattle either because while their taxes should decrease, using DCAD’s larger measurements means they can sell for more (based on the inflated number).
Get What You Pay For
Whether it’s a seller, buyer or their respective Realtors, make sure square footage is right so prices are right. And if you stumble on a listing that openly states the square footage doesn’t align with DCAD, you better find out why.
Remember: High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. If you’re interested in hosting a Candysdirt.com Staff Meeting event, I’m your guy. In 2016 and 2017, the National Association of Real Estate Editors has recognized my writing with two Bronze (2016, 2017) and two Silver (2016, 2017) awards. Have a story to tell or a marriage proposal to make? Shoot me an email [email protected].
