Two Measurement Standards: ANSI vs. AMS
Are you really following the ANSI ® home measurement standard? When the ANSI ® standard isn’t really ANSI ®
Many agents (and appraisers) claim to be using the ANSI ® measurement standard, when in fact they are using the American Measurement Standard®. And, there’s no one rushing to teach them the difference. Industry leaders have taken a “don’t ask, don’t tell” policy, and square footage remains a source of confusion in the real estate industry. In many parts of the country, agents and appraisers are disclosing to their clients that they strictly adhere to the ANSI ® measurement standard. But, as many of their sketches are being reviewed by another appraiser working for an appraisal management company, they are discovering that the measurement method they used to calculate the square footage total is NOT the ANSI ® method at all. The method they use is perfectly acceptable and has been utilized throughout the real estate industry for well over a century. But, it is NOT the “Standard” they have been led to believe.
The public recognizes the ANSI ® name and it’s the only standard of measurement most professionals know. And, let’s be very clear, the ANSI ® guideline is an excellent reference tool and has provided a much needed resource since 1996. Prior to 1996, there was no formal standard to support the measurements created by real estate professionals. ANSI ® is a well-respected resource and, if followed in its entirety, provides a true measurement standard. In most cases, the agent or appraiser who discloses that they adhere to the ANSI ® standard, truly believes they are following this methodology 100%. However, upon a closer review of the sketch, the problems quickly come into view; problems which could potentially have significant liability implications.
Since the humble beginnings of the appraisal industry, there have always been two different theories or philosophies about how to measure stairs and the sloped spaces beneath. No one method better than another, just different. But, there could only be one method chosen for the new industry “Standard.” For those who already utilized this methodology, ANSI ® was the perfect support tool. However, for all of those who measured stairs by the second method, they were left on their own with a new standard they could not use. Even during the creation of the first Standard, the vote was not unanimous on how to calculate square footage.
But, a choice had to be made. Much like the speed limit; everyone may not agree about a fair speed limit on a wide open interstate highway, but there simply has to be a “rule” for all to follow. That’s the way most things in our society work. This new standard could have ended any debate and brought about an industry-wide agreement on measuring square footage. However, it was not nationally mandated in the real estate or appraisal industries, and most people continued to measure the way they had been taught; not in formal CE classes, but in on-the-job local training. This debate has been going on for over a century.
In 2009 the American Measurement Standard® was finalized, which offers those who choose to measure stairs by the method they have always used (which does not follow ANSI), the level of liability protection necessary for today’s real estate professional. Every component of a single-family home is measured by a national or international standard. But, once assembled to form a residence, there is no national standard required by all professionals. Square footage provides the very foundation of home comparison and valuation, yet the industry cannot seem to find a way to agree on this issue.
It is easy to discover that these two methods are currently in practice all across the country. And now (those who don’t measure stairs by the ANSI method), they don’t have to change the way they measure a home to adhere to a written standard; they just have to make sure they know which Standard they follow. When the real estate and appraisal industry leaders agree and mandate one specific methodology, then we will all follow their rules. Until then, the AMS® offers professionals a choice. In today’s litigious environment, it is imperative that a professional has the ability to hold a document in their hand and say “this is how I calculated the square footage.” And, that another professional could follow their steps and recreate a similar total using the same guideline.
Let’s look at one example that highlights this problem.
The sketch below was posted online by a licensed real estate appraiser. The sketch looks professional and the advertisement certainly sounds like this individual knows what they’re doing. However, if there is ever any question about a square footage total provided by this appraiser, there may be trouble. It’s nothing intentional on the appraiser’s part, but many practitioners don’t understand exactly what adhering to ANSI ® means.
There are also very few places to turn for help on this topic. You can only claim that you adhere to any standard, if you follow it 100%. You can’t just use only the parts you like or agree with. The real estate and appraisal industries provide forms, disclosure statements, and national guidelines for every imaginable topic; all except one. One of the most fundamental components of real estate valuation is apparently not an educational priority. However, three recent state appeals’ court decisions may have changed everything. Real estate professionals (agents and appraisers) are being held accountable for the square footage numbers they provide. Quoting that the square footage number was taken from the local tax office no longer gets you off the hook. If you report the number, it’s your responsibility to get it right. You are the expert.
If a square footage total ever comes into question and the appraiser (or agent) needed to explain how they calculated their square footage total, just imagine yourself sitting in front of a judge and jury. Your advertisement claims that you follow the ANSI ® guideline. Then, the attorney points out that your sketch really does NOT follow that guideline and casts a shadow of doubt on your measurements, and your valuation. The homeowner, who feels they paid too much for the property (and part of their decision to buy was made based on your work), has had another appraisal done. And this time, the square footage total is much less than yours. If you’re on that jury, who are you going to trust? There’s the appraiser who advertises they follow the ANSI ® standard, but it has been proven they do not. Or, the homeowner who claims their new appraisal is accurate and they unfairly paid too much for their property? Even if the new square footage total is way off, your credibility has just been dragged through the dirt and any other arguments you make don’t instill much confidence in the jury.
Even though your sketch was credible and could have been supported by a written standard, the fact that you (the square footage authority) did not know the true measurement method you were using, could definitely influence the verdict. I certainly hope you never have any value or square footage total questioned. But, if you do, your odds of winning your case would go up substantially, by knowing (and being able to explain) measurements and standards. If the experts don’t completely understand this subject, what is the public to think?
So, what’s wrong with this picture?
There are two problems with this advertisement.
1. ANSI ® guidelines clearly state that all measurements are to be made to the nearest inch (or tenth of a foot) and rounded to the nearest whole square foot. “Measurements to the nearest half foot,” as stated in this advertisement, would automatically void any claim of adherence to the ANSI ® standard.
2. The upper level measurements show the level, finished floor area, but do not include the dimensions of the staircase. Following the ANSI ® guideline, the square footage calculation would include this space within the upper level dimensions. Stairs are counted on the level from where they start and descend; meaning the space of the staircase should be included within the upper level gross living area (and on the floor below, regardless of ceiling height). Regardless of the statement or disclosure, if a problem arises that calls this sketch into question, the appraiser could NOT claim adherence to the ANSI ® guideline. And, by making inaccurate statements within the advertisement, it would be difficult to maintain any degree of credibility in providing a square footage total, potentially leaving the appraiser at risk in any liability claim.
The method of measurement used in this sketch is perfectly acceptable in mortgage lending and all appraisal assignments. It is currently in use throughout the country. However, this method adheres to the AMS® and not to ANSI ®. Use the method you are most comfortable with and that allows you to provide consistently reliable square footage results. But, make sure you know which standard of measurement you follow. Your best liability protection is provided by including a written “statement of square footage” disclosure, and following a written standard of measurement. One that you could hold up in court (if necessary) and say “this is how I calculated the square footage.”
The real estate experts need to understand the difference.
So, is there any big difference in square footage totals between measurement standards?
My short answer is no. However, it really is one of those “it depends” questions. The average staircase measures between 30 and 40 square feet. Not a big percentage of a home by any means. But, for those insistent on creating values at the magic price-per-square-foot formula, even at $100.00 per square foot we’re talking about three to four thousand dollars. If that was your money, would that amount matter? Would you want to know there could only be one correct square footage total for your property? Should the industry professionals be able to provide accurate and reproducible measurements?
More important than a square footage difference, or even a total value difference, the biggest differences in the square footage issue are professionalism and consumer protection. Under our current assortment of measurement methods, consumer protection is not high on the list. A large percentage of agents are now calculating listing values, based on the square footage total reported by the local tax office. That’ a whole different problem. But, the point is; that until there is an agreement on one measurement standard, agents are going to be afraid of the subject and consumers are going to be at the mercy of the local tax assessor, who creates notoriously wrong square footage counts. And, who could blame the Realtors® for not wanting to report square footage? If appraisers are the ultimate real estate experts and they can’t agree on how to measure a house, why should any agent take the liability chance and measure a home’s square footage?
Lots of MLS systems are getting away from reporting square footage details. Yet, they continue to use the price-per-square-foot formula on every home. That simple formula only works with accurate square footage details. Listing Agents used to always provide a specific square footage total for every home. These days, many MLS systems use a square footage range. And, many are choosing not to report square footage at all; mostly due to liability concerns. All of which is bad for consumers. So, we come back to the same old liability vs. responsibility debate. Should a homeowner expect their Agent to measure their home (or have it measured) as part of their listing services? Can an Agent represent a homeowner’s best interests without knowing the correct size of the dwelling?
If you put on your consumer hat and look at it from a home buyer or seller’s perspective; you could have three real estate experts come to your home and you may get three totally different square footage totals (and values). No other business operates with such an allowable margin of error.
Imagine trying to build a house without any measurement standards. It would be chaos. That’s what we have now with the square footage issue across the country; chaos. And it’s easy to discover just how bad the problem is; one quick poll will quickly show just how much confusion there is on this subject. This is the information age; standardization should be mandatory in every profession. Should someone who determines the value of most people’s single, largest financial investment not have one standardized way to measure a home’s square footage?
The use of computer generated valuations just makes this problem worse and gives out wrong property values based on inaccurate square footage data. And, consumers often trust these technology based services, unaware that by having the wrong information going in means they have wrong property values going out. It happens every day. And, it’s going to keep getting worse until the real estate industry finds a way to agree on one national measurement standard.
All the big talk about consumer protection is just words. It falls woe fully short when it comes to the topic of residential square footage. The best protection for a homeowner is to have their home accurately measured (before any CMA is completed), and have it measured by a formal measurement standard. After a real estate crisis, should we be concerned with providing accurate property details so the experts can offer credible home valuations? Yes; now more than ever.
Watch Hamp Thomas on AMS and ANSI: