Submitted by: Bob Rodwell

I hear that question a lot. Since home prices are often shown as a price per square foot, and property taxes seem to be based significantly on the home size, both sources should be accurate – so why do they disagree, and sometimes by a lot?  There are several reasons. 
In Wake County (see www.wakegov.com/tax/default.htm), tax records use measures in whole feet, so they show rounded rather than precise figures. Picture a two-story simple box-style house, for which the tax records show a “footprint” of 40 feet long by 30 feet deep, or 2400 square feet. If the true measure of the home is 40 feet long by 30 feet 3 inches deep, that’s really 2420 square feet. So tax record measures will rarely match an appraiser’s or real estate agent’s measure, even if both are right, as in this example. But that’s a relatively small difference, and does not explain some of the much larger ones seen. Here are the big difference makers I’ve seen recently.
 
  1. The home shrank! One example: a townhome for which the tax records had 2892 square feet. The MLS listing had 2300 square feet. What happened to 592 square feet? The home was a model home for the subdivision. At the time the tax records were defined, the home included the builder’s office. Later, when it was sold, that large office was converted to a garage, which does not count in the heated square feet. But the tax records have not been updated (I don’t know why).  
  2. The home grew! This is much more common: a home is recorded reasonably accurately in the tax records, and the owner finishes off an attic or basement area later. Perhaps the owner got the appropriate permits and inspections, perhaps not – but in either case the tax records were not updated to include the new square footage. If you are looking at a home where the MLS listing (or seller in a for sale by owner home) shows significantly more footage than the tax records do, find out why, as there are some risks and costs to consider if an unpermitted addition was made.
  3. Tax records show the wrong house! Not really, but sometimes builders provide standard floor plans for the tax records, but then deviate from those plans, perhaps finishing off an optional bonus room for example. All permits and inspections are ok, but for whatever reason the tax records still reflect the plan, not the finished product. I believe this to be the main cause of the difference in a home I showed recently where the tax records showed 2470 feet and MLS showed 2720 – almost 10% larger.
  4. Tax measures are guesses sometimes! Tax measures are taken outside, but not inside. So if they think the home has a 2-story foyer or a partial bonus room over a garage – they have to guess at how much to allow for those differences from the “footprint” measures. I’ve shown a home where the tax records showed a basic box 2-story house, in effect incorrectly counting the both 2-story foyer and the 2-story breakfast nook twice.
I recommend, first, that we don’t get too carried away with expecting precision in either tax or MLS measures. There are lots of other factors affecting the property tax value or list price. Expect reasonable accuracy. And if they differ by 1% or so, don’t worry. There is the rounding aspect and some homes are pretty tricky to measure.  If the measure is reasonably accurate, isn’t it more important if the home meets your needs or not? 
 
Second, if you just don’t think a home you are seriously considering is sized correctly, ask your agent or the home seller to explain the difference. It may fit one of the scenarios above. If your concern persists, ask your agent to measure the home. Recognize this takes time and effort, so please save those requests for where needed!  Know that if you will need a mortgage to buy a home, it will be measured by an appraiser, and that measure will be used to help determine the loan value. If the appraiser finds significantly fewer feet than advertised, the appraisal value may come in lower than your offer price and ruin the deal.  So if there is a real risk of that happening, re-measure before making your offer!