Beware of property square feet mismatches

November 13, 2013

In property, size matters! You might want to double check on the square footage of the unit before paying the 2% earnest or booking deposit.

FEATURE

By Shaun Lee
Slight differences between the advertised and actual square feet for your property may seem negligible, however it can actually cost you quite a bit of your money! SaveMoney.my explains:

Imagine this, it’s a Saturday afternoon and you have arranged for a viewing of a condo unit in a development that you have had your eyes (and heart) on for a while. The development has good security, lush mature gardens, with gorgeous water features along with tranquil plants to match.

This particular unit that you have arranged to view was advertised in The Star Classifieds as a 2,000sf duplex unit for sale at RM650k negotiable. Even before you step foot into the unit, you know the feeling is right. And lo and behold after viewing the inside of the unit, you decide to make an offer for the place.

The agent was quick to reduce the price to RM600k but the figure you had in mind was closer to RM580k so you negotiated further, but after rounds of lengthy negotiations the final price was agreed at RM590k (though you did ask for ALL the furniture in the house, white goods and LCD TV! at that price).

Now you proceeded to request for a copy of the original Sale & Purchase Agreement from the seller to confirm the square footage of the unit (It’s best practice to do so before paying the 2% earnest/booking deposit as it safeguards you from potential disputes with the seller. Alternatively, you can do a manual insertion on the booking receipt that the offer is subject to confirmation of the actual square footage of the unit). When you finally get hold of the original Sale & Purchase Agreement, it came to your attention that the unit is only 1,926sf in size! So you asked the agent, “What happened to the other 74sf?”

Size matters
74sf does not sound like a lot. But here is the math behind it:

At RM590,000 for 2,000sf, the price per sq foot is RM295.00

At RM590,000 for 1,926sf, the price per sq foot is RM306.33

Difference in price per sq foot is RM11.33

At the original agreed price of RM295 psf, you should only be paying RM568,170 (RM295 x 1,926sf) for the unit i.e. RM21,830 less than the agreed price.

The sale falls through as both parties could not agree on the price. You were left high and dry. So was the agent who failed to seal the deal.

As such, when making an offer for a place, confirm all that you need to know with the seller before paying your earnest/booking deposit. It’s only right (and fair) to know what you are actually getting before you could begin negotiations. Otherwise, it will end up being a guessing game that is to your clear disadvantage!

Real estate agents, if you are reading this, please ensure you confirm the unit size of the properties that you are marketing so you are not left high and dry when you are so close to closing a sale. It’s only in everybody’s interest for you to do so!

Shaun Lee is the Resident Property Expert at SaveMoney.my, Malaysia’s Number 1 Money Saving Community that helps you save RM1,000’s on Banking, Credit Cards, Loans, Phones, Travel, Shopping, Property and Taxes.