Exposing the Lies that Measure NYC Real Estate
In November 2007, Rishi Bhandari and his fiancée put down a $79,500 contract deposit for a 2-bedroom, 2-bathroom condo on the third floor of 110 Livingston Street. But when visiting the apartment before the deal closed, Mr. Bhandari noticed that the living room appeared much smaller than he had originally believed. He returned with measuring tape to confirm his suspicions: the living room, bedroom, and kitchen areas covered only 634 square feet. The floor plans listed them at 743 square feet. According to an appraiser, those additional 109 square feet equated to a considerable $111,000 reduction in the unit’s value. Mr. Bhandari attempted to renegotiate his original bid and, when unable to come to a new agreement, found himself suing the developer.
This story, written up in The New York Times twelve years ago, gets to the heart of the controversy surrounding apartment square footage estimates in New York City. Countless articles have been written on the topic. As far back as August 1984, the Times was covering the confusion regarding apartment metrics in an article titled “The Incredible Shrinking Square Foot,” which debated the very notion of what constituted a square foot. Some believed it to measure 144 inches (a 12- by 12-inch square). Others declared a square foot to measure anywhere between 95 to 130 inches, depending on the building, the owner, and market conditions.
And here we are, almost two decades into the new millennium. The city’s real estate market grows year after year at an unrelenting pace. Stories about square footage still pour out from local publications and institutions in a dizzying flurry. Somehow, all of this has resulted in mass consumer confusion and a total lack of standardization when it comes to measuring apartment size. It’s still frustratingly easy for sellers and their brokers to rip off buyers by advertising inflated square footage estimates on listings.
How did we get to this point? The short answer is money and greed. The more optimistic answer is still money and greed, but there are simple ways to avoid falling for bogus apartment metrics. In the following article we explain how square footage is actually calculated, the difference between measuring in co-ops and condos, and common problems that arise when marketing an apartment’s size.
Standards for Measurement
In other parts of the United States, where detached homes, and not apartments, are the norm, there are stricter standards in place for measuring residential real estate. The American National Standards Institute (ANSI)—a private non-profit that establishes guidelines for businesses across a variety of industries—publishes a document titled “Square Footage—A Method for Calculating.” It outlines different scenarios for residential real estate and factors that should be considered when determining a home’s square footage. Measurements are typically taken from the outside of the home and basements, for example, while porches and attics shouldn’t be included in the final calculation.
But things work differently here in Manhattan, where the power of the Real Estate Board of New York (REBNY) trumps any held by ANSI. REBNY is a trade association. It’s mostly run by individuals who work or have holdings in real estate. As such, the group operates on a completely different set of incentives. They allow for a much more creative—some would say aggressive— approach towards measuring square feet.
Adding to this confusion, apartments, unlike homes, are not detached. When it comes to calculating the size of your Manhattan pad, you’re going to have a much more difficult time right out the door than say, your sister back home in Wisconsin.
And we’re sorry to tell you, but it gets even more complicated.
Getting to Know Your Space: Gross vs. Usable
“So how many square feet are we looking at?”
That’s one of the most common questions we get asked when selling apartments. Unless it’s a condo, we find ourselves explaining that we don’t quote an apartment’s gross square footage and refer instead to measurements on the floor plan.
This confuses a lot of potential buyers, who often challenge our approach.
“Everyone else tells us the square footage,” we’ve heard, “Why don’t you?”
Let us explain.
When an appraiser, realtor, or owner measures an apartment, they’re looking at the unit from one of two perspectives: gross square footage (taking measurements from the exterior of the apartment), or usable square footage (taking measurements from the interior).
Here’s the kicker: these numbers get fiddled with all the time, as several external factors can drastically change the quoted square footage on a particular home. Such factors include whether you live in a co-op or a condo, and whether yours is a full-floor apartment with no neighboring units, a corner apartment with one neighboring unit, or if you’re sandwiched between two other homes.
A Brief Study of Advertised vs. Usable Square Feet
Which apartments exaggerate their size the most: co-ops or condos? We randomly picked 20 “For Sale” listings on StreetEasy (10 co-op, 10 condo) and compared the number of square feet advertised to the “wall-to-wall dimensions” on the floor plan. Here’s what we found. . .
The results weren’t shocking: based on the 20 apartments in our study, condos advertise a median of 9% more square feet than their usable space, while co-ops exaggerate their size by a median of 16% more than their usable square footage.
To understand this discrepancy, consider where these estimates are coming from. Condo developers almost always include gross square foot measurements in the offering plans of their buildings, which real estate agents can then cite as an official figure when they list an apartment for sale. As we’ll explain below, these gross square foot calculations are misleading in their own right—they factor in common areas, space between walls, and even elevator shafts—but they employ a methodology that is consistent across apartments throughout the building. In a co-op, offering plans assign numbers of shares to each unit, and make no mention of square foot measurements. As a result, a real estate agent who lists a co-op and decides to advertise square feet is left with only one solution: to calculate wall-to-wall dimensions, and then add an arbitrary percentage increase to that figure to arrive at a rough, DIY approximation of gross square feet.
How to Measure Square Feet in a Co-op
If you live or are looking to buy in a cooperative building, you’ll quickly learn that you are a shareholder, and technically not a property owner. You don’t even own your apartment’s walls (this will be relevant soon enough).
In many ways, you reap a whole laundry list of benefits from that structure. Have a heating, plumbing, or air conditioning problem? It’s the co-op’s responsibility to fix it and foot the bill. But this also changes the way the square footage of your apartment can be calculated.
In a co-op, unlike a condominium, an apartment’s square footage is not quoted in the founding document that defines the ownership structure of the building—otherwise known as the offering plan. Instead, each apartment is allocated a certain number of shares based on what the sponsor—the company overseeing a building’s conversion to a cooperative—determines as its value. While this is an admittedly quasi-arbitrary calculation, a sponsor will work in conjunction with a realtor and appraiser to determine these relative valuations. Views, sunlight, ceiling height, floor number are all considered in this process—and so is approximate size.
This means that any square feet calculations in a co-op must be based on usable square footage, or what’s often referred to as a “paint-to-paint” measurement. Each room’s size—from the inside of the apartment and including any bathrooms or closets but excluding outdoor space—is taken individually and later added up to a sum total of usable square footage.
You may notice that this sum is drastically smaller than you expected. It may even be at odds with the square footage posted on the listing or floor plan. This discrepancy is also at the heart of the bamboozling surrounding square footage measurements in the real estate market, as we’ll explain later.
How to Measure Square Feet in a Condo
In a condo, unlike a co-op, you take title to real, honest-to-God property. You own the entirety of your apartment, and then some. In fact, if you look at the fine print in your condo’s offering plan, you’ll learn that you own the walls (unlike your co-op shareholder counterparts), and part of the “common spaces” on your floor, such as the hallway, garbage chute, or elevator shaft.
When a developer or resellers market a condo, their go-to method for measurement is “gross square feet,” as opposed to usable. This dramatically inflates the perceived size of an apartment, as poor Mr. Bhandari learned all too well in 2007. Depending on the type of unit, measurements will be taken either from the exterior or from the middle of the perimeter walls. When walls range from 4 to 6 inches in thickness, this change in measurement alone has a noticeable impact on the overall square footage of the unit in question. And that’s before taking into account structural, common and “dead,” or functionally unusable, space.
Because of these two night-and-day approaches to measuring, looking at the square footage estimates of co-ops and condos side by side can feel like you’re examining the size difference between an Italian Vespa and a Chevy 4x4.
Far too few New Yorkers are aware of these differences, and this allows sleazy brokers the opportunity to be dishonest about square footage. Seller’s agents can tout the size of their condo listings without addressing the usable space a buyer might need to accommodate their needs. Meanwhile, agents with co-op listings are tempted to dishonestly inflate their own square foot measurements in a scattershot attempt to compete with the gross square foot technique used by condo developers. And as we’ve determined, neither of these practices reflect the true spatial reality of the apartment being sold.
So we warn our clients—and everyone looking to buy an apartment—to be careful when scouring through listings online, especially if they come across a co-op listing that quotes square footage. Ask yourself how the realtor came up with that measurement. Did they simply add up the paint-to-paint dimensions from the floor plan? It’s not uncommon for co-op listing agents to take the paint-to-paint sum and add anywhere between 20% to 40% to arrive at a gross square footage number. And as we explained earlier, gross square footage is an irrelevant metric for shareholders who cannot own the space beyond their walls.
Manhattan real estate transactions are by nature enormously expensive and time-consuming affairs. Faced with an onslaught of pros and cons, caveats and competing priorities, it’s understandable that potential buyers would want to use any calculus available to arrive at a meaningful decision. That’s why price-per-square-foot calculations are so common in real estate. And that’s why, when you shop for an apartment in New York City, we recommend you treat all apartments equally, and bring your own measuring tape.
Seriously. Use the tried and true, paint-to-paint method. Measure the size of every room and be consistent in your methodology. Always consider how the layout and flow of an apartment can affect its usability.