Buyers and sellers should understand the rules for appraising the size of a property
Article Last Updated: 11/10/2007 11:20:35 AM MST
(Post / Severiano Galvan)
Homeowners may believe their total square footage is simply the sum of floor space in all the rooms, hallways, and closets. But when measured conventionally, it is usually much greater than that.
Inaccurate appraisals have been cited as a factor in the wave of mortgage defaults affecting the nation. Some inaccuracies may be willful, as alleged in a recent lawsuit by New York's Attorney General against First American Corporation, a big California-based appraiser.
But more commonly, real estate professionals say, disputes and inaccuracies stem from ignorance of the standards.
"There are abuses and there are honest mistakes," said Gary Licata, who appraised properties professionally in metro Denver from 1991 to 2006. For much of that time he also served on the Denver County Board of Equalization, helping to settle homeowner disputes of tax-assessment appraisals.
The accepted method is to measure and multiply the home's exterior dimensions. Included in the total appraisal is the full thickness of the interior and exterior walls.
"There's a reason for that standard," said engineer Tom Kenney of the NAHB Research Center, operated by the National Association of Home Builders.
Square footage is the basis of property tax assessments. Tax officials may not have access to the inside of a home, but exterior measurements are usually possible.
Kenney's organization, based in Massachusetts, collaborated with professional groups in the 1990s to devise standards that now guide the actions of private and government home appraisers in many localities, including Denver. They are published by the American National Standards Institute.
"Those standards are intended to make commerce more predictable and help avoid lawsuits," said Kenney.
Where things get tricky, says Licata, is in following the rules for exclusions when it comes to determining the total square footage of a home.
Unfinished space, such as a garage, is not counted. Even an unfinished utility room or a covered patio, if it is not usable year-round, must be excluded.
Another exclusion may apply to a room with a sloping roof, such as a finished attic. To be included in the total square footage, at least one-half of the room must have a ceiling height of seven feet or more. Excluded from the total are portions of the room where the ceiling height is less than five feet.
"A typical Denver square (style) home might have 1,250 square feet," said Licata. "But the sloping roof might disqualify as much as 100 square feet of the upstairs space."
If an appraiser fails to make that adjustment, the home's total space would be overstated by more than 8 percent. Differences of that degree are sometimes found in listings for neighboring properties that are apparently identical.
Another challenge stems from the fact that some rooms aren't "square," particularly in older homes. "One wall may measure 16 feet and the one directly across from it is 17 feet," said Licata.
Stairways are especially challenging for appraisers. If the stair opening as viewed from above is not entirely occupied by stair treads and landings, the unoccupied portion must be excluded from total square footage.
Inflated appraisals have led to lawsuits in which buyers said they were shortchanged. The Colorado Real Estate Commission provides sellers' agents with a square-footage disclosure form to accompany sales contracts. The agent enters the square footage and indicates its source, such as a fresh appraisal, a prior appraisal, building plans or county records.
County appraisals are done for tax purposes, not to help sell homes. But many real estate agents feel they provide a degree of protection against liability. The data is recorded when a home is built or when modifications are made - legally, that is, with a building permit. Much of it, of course, is missing or decades old.
"If it's inaccurate, not many people are going to sue the county for that," noted Licata.
While homeowners often dispute what they consider over-assessment of their property, some claim government appraisals understate their square footage.
"People say, 'You missed my finished basement,"' said Ben White, chief appraiser in the Denver County Assessor's Office. "It's important to some people that our data reflect what they consider fair value," he said.
The motivation may be to support a certain selling price or to refinance a loan. A key aspect is above-grade square footage, which sits higher than the ground outside. It's considered more valuable than what's below grade. Property appraisals must differentiate between the two.
In the many Multiple Listing Systems used by real estate agents, there is no universal language to make various distinctions. "A lot of our data comes from individual Realtors," said Metrolist spokesperson Melissa Olson. "They may measure diligently but not with the same standards as professional appraisers."
Affordable housing vacancies fall
Article Last Updated: 10/08/2007 09:25:36 AM MDT
Statewide apartment vacancies in affordable housing dropped to 4.7 percent during the second quarter, according to a report released today by the Colorado Division of Housing and the Colorado Housing and Finance Authorities.
That's down from 6 percent during the first quarter.
The tightest market for rent-restricted housing was in Grand Junction, which had a vacancy rate of 1.7 percent. Other tight markets included Pueblo, 4.1 percent, the Denver metro area, 4.3 percent and Colorado Springs, 5.1 percent.
The highest vacancy rates were in Greeley, 5.6 percent, Loveland, 7.8 percent and Fort Collins, 8.2 percent.
All but Pueblo, Douglas County and the northern Colorado communities showed a decline in vacancy rates since the first quarter.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
2008 democratic national convention
Pressure mounts for DNC housing hunters
Some locals hope for big bucks from renting out their homes, but it's not so easy.
Article Last Updated: 10/06/2007 04:28:48 PM MDT
The day Democratic National Committee Chairman Howard Dean announced Denver would host the 2008 Democratic National Convention, David Bennahum started looking for a place to stay.
That was back in January, and he's still looking.
"I have one lead, and I can't tell you about it," said Bennahum, president and chief executive of Washington, D.C-based Center for Independent Media, publisher of ColoradoConfidential.com. "If I told you, people would come and poach my lead. I haven't secured it yet." |
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The Democratic National Convention is still nearly a year away, but the pressure is on for those looking for housing. The DNC has blocked out 17,000 hotel rooms for the week, but it isn't allowing any of the 35,000 people expected to attend the convention to reserve them until January.
A $1 million donation will land a company on the DNC's priority housing list. A $250,000 donation will secure at least one room.
That has some companies already looking for alternatives to hotels, and many Denver residents are looking to cash in.
A Washington, D.C., law firm already has agreed to pay $2,000 a night for Rick Mirsky's 2,400-square-foot loft above the Wynkoop Brewing Co. in Lower Downtown. The convention itself is slated for Aug. 25-28. The firm will lease the loft starting on Aug. 24.
"It's an opportunity that rarely happens, to be able to make $5,000 to $10,000 in a matter of four days," said Mirksy, who plans to take a vacation with his fiancée during the convention.
By comparison, actor Eddie Murphy's budget for a condo while he's shooting a film in Denver is about $10,000 for the month. Typically business executives pay between $2,000 and $3,000 a month, with the average corporate housing client needing a place for 93 days a year.
Mirsky arranged the deal through AvenueWest Corporate Housing, which will take up to a 40 percent cut. The law firm is still looking for another 41 rooms.
AvenueWest is getting five to 10 calls a week from people looking for housing during the convention. It's also got a steady stream of homeowners interested in leasing their condos to conventioneers.
"There are a lot of people who want to secure lodging now," said Kimberly Smith, who with her husband, Eric, founded the firm in 1994.
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AvenueWest is accepting properties only in the 80202 ZIP code. Its sister company, Corporate Housing By Owner, will allow homeowners in any ZIP code to post their properties on its website.
Tenants who lease condos through AvenueWest must pay in full in advance. The money will be held in escrow until their arrival in Denver.
During the convention, owners leasing homes in the 80202 ZIP code can expect to get up to $350 a night for a basic 750-square-foot condo. High-end properties may be able to command up to $14,000 for the week.
Hotels have not yet announced their rates for the week.
Renting your condo not so simple
Developer Mark Falcone, chief executive of Continuum Partners, said he's getting inquiries for units he has available at Art House downtown and Belmar in Lakewood. Many of the leases Continuum has negotiated in recent months will end in July so the company will have units available for the convention.
It's asking a minimum of three months' rent to lease a place for the month of August.
"For Art House, that's $12,000 to $13,000," Falcone said. "There are people who really do need things for a whole month. Three hotel rooms would have the same cost and value for the same duration."
While demand for accommodations in the 80202 ZIP code may be high, renting out a condo isn't as simple as it sounds. Owners will be responsible for paying the city's lodging tax, providing maid service, phone, cable and high-speed Internet access.
All closets and dressers must be cleaned out and the kitchen fully equipped, right down to an ice-cream scoop. Sheets and towels must match.
"You're essentially turning your home into a business," Smith said. "If you've never rented out property, you probably don't have the right expectations."
Many, it seems, don't have the right expectations. Dozens of people have listed their homes on the online classified website Craigslist in hopes of making a quick buck - or thousands, with some owners asking for $20,000 to $40,000 for the month.
"That is just way out of range," Eric Smith said. "That's Craigslist for you. It's so bizarre. If they were paying for the ad, I would say it would probably be more realistic."
Homeowners' associations also could be a problem, said Dee Chirafisi of Kentwood City Properties.
"There's usually a minimum of a six-month or three-month rental," she said. "There are going to be residents in the buildings who rat on each other."
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com.
DU neighborhood worth observation
University Park, a.k.a. Observatory Park, features wide streets and elegant homes, making it "one of Denver's top" locations.
Article Last Updated: 10/06/2007 03:13:06 PM MDT
With wide streets lined with mature trees and elegant homes set on deep lots, prices in University Park - or Observatory Park, as newer residents call it - have skyrocketed in recent years as people discover its storybook feel and prime location.
Median home list prices in this southeast Denver enclave jumped from $279,900 in 1998 to $999,000 last year, according to Denver's PorchLight Real Estate Group.
"I'd say it's one of Denver's top neighborhoods, appreciation-wise," said Heidi Finn, a broker associate at PorchLight. "It's an architecturally stunning neighborhood, with large lots and big homes, many with attached carriage houses. It's obviously very upscale." |
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The neighborhood's crown jewel is the two-block- wide Observatory Park, known for its rugby and softball fields and home to the University of Denver's Chamberlin Observatory.
The Romanesque domed structure, completed in 1894, is listed on the National Register of Historic Places. Many of the neighborhood's first stately homes were built along the park in the late 1800s for DU professors and faculty.
The university - home to Magness Arena, the Newman Center for the Performing Arts and the
Coors Fitness Center - is one of the main amenities mentioned by residents.
Many also take advantage of the numerous eateries that line South University Boulevard, including Pete's University Cafe and Mustard's Last Stand.
On the opposite side of the neighborhood, a major new retail center is nearly complete on the northwest corner of South Colorado Boulevard and East Evans Avenue. Office Depot opened there recently, and a Vitamin Cottage market and two restaurants are coming soon.
Like many older Denver neighborhoods - including Washington Park and Park Hill - many of University Park's cozy bungalows are being snapped up and scraped to make way for much larger homes.
Also, empty-nesters fromsuburban gated communities are moving into many University Park homes.
Anne Mack and her husband, Jim, fit that bill. Last year, they left Cherry Hills Village for a brand-new 3,800-square-foot home on South Cook Street.
"It feels more like a real community," she said. "And we just love the location - we jump on the light rail and go downtown, Cherry Creek is close by, we go to performances and lectures at DU."
The numerous scrapes have led to a major complaint by residents: a high level of construction noise.
Some also grumble about DU students living in rentals, mainly on the west side of the neighborhood. That challenge isn't likely to diminish soon - several large, student-oriented housing projects are under construction along South University Boulevard.
University Park
Location: Bounded by Interstate 25 to the north, East Yale Avenue to the south, South Colorado Boulevard to the east and South University Boulevard to the west.
Who's moving in: Young families looking for good public schools and empty-nesters seeking an upscale neighborhood that is centrally located.
Current price range of homes: $205,000 to $2.3 million
Public schools: University Park Elementary, Merrill Middle School, South High School.
Amenities: Wide streets; large lots; mature trees; central location, within walking distance to the University of Denver; Observatory Park and McWilliams Park; and an active neighborhood association, the University Park Community Council.
Complaints: Lots of construction and traffic noise; some student rentals.
Eateries: Pete's University Cafe, Mustard's Last Stand and Stick-e-Rice
Little-known fact: The Denver Astronomical Society holds two weekly events at DU's Chamberlin Observatory.
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