Gross Nonsense – People Aren’t Overcharged For Houses Because Floor Plans Are Wrong

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There’s an odd – and incorrect – assumption being made here in this complaint that the British are being overcharged for their housing. Sure, it could be true that prices are too high, in fact we’d almost certainly conclude that they are. But they’re not too high for the reason being given – we don’t buy housing by square foot. Thus errors in recording the square footage don’t lead to errors in pricing.

Another way to put this is that the market price is the market price and so if an error is always present that doesn’t change what the market price is. If we’re all paying £5 for a bag of apples whether that’s a 1lb bag or a 2lb bag doesn’t change that market price of £5 a bag of apples.

Property buyers are overpaying by an average of £13,000 because of mistakes made when measuring floor space, according to an explosive report. In London, this figure soars to almost £34,000. The average property in Britain is mismeasured by 54 sq ft, according to the research by Spec, a property tech firm, meaning buyers could be overpaying by £13,090 based on the typical price per square foot of £242. Spec said its research revealed that mismeasurement happens in 60pc of sales and that in one in eight cases the amount of floor space was oversold by more than 100 sq ft. In London, this equates to £57,697.

Nonsense. We just don’t buy property by the square foot. We don’t record prices that way, don’t consider prices that way, that’s just not how prices are determined. Thus the allegation rather fails, doesn’t it?

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timworstallCJ Nerdliterate3Jonathan HarstonTD Recent comment authors
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Leo Savantt
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Leo Savantt

In many parts of Continental Europe the price is primarily driven by the size in square meters, with location and architectural merit being secondary factors. By way of example in Skopje, the capital of the newly named North Macedonia, the difference in price per square meter varies only about 10% between the more desirable mountain side area and the less celubrious flat land neighbourhoods. Perhaps this is partly due to Macedonia having not had as defined a class system as the UK. Mostly for much of the last 500 years Macedonians were peasants under Ottoman rule, and then after a… Read more »

Dodgy Geezer
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Dodgy Geezer

“….buyers could be overpaying by £13,090 based on the typical price per square foot of £242. ….”

I’m guessing that (if any aspect of this clickbait report is true) that both sellers and buyers are more likely to be more concerned about area where the price is high, and less concerned about precise measurement where the price is low. Thus skewing the average considerably. Do you think that this was corrected for?

bloke in spain
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bloke in spain

True that Brits don’t buy housing by the square foot. But if some sellers are overstating the floorplan area & some aren’t, some buyers are being misled about the comparative advantages of the overstated homes against the correctly stated. Given two houses with the same stated area & same offer price in the same location, the overstated property is clearly less desirable than the correctly stated one. Expressing the shortfall as a price seems fair enough. What unit do you want to use? Ikea coffee tables? Taking your bag of apples analogy, if you’ve been told the bag contains 2lb… Read more »

TD
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TD

Try finding two appraisers who’ll come up with the same square foot measurement. Do you or don’t you count staircases and other differences.

literate3
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literate3

It is normal in the UK for potential buyers (at least would-be owner-occupiers) to look around the house/flat before making an offer. The offer is based on their individual perception of the property, quality as well as quantity, and not on the measurements on the floor-plan.
I am not a prolific purchaser so saying that I have never been influenced by the total square footage in the reported floor plan cannot (or, at least, should not) be extrapolated but you either want the dwelling or you don’t and a mis-meaaured floor plan is not significant.

Jonathan Harston
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Jonathan Harston

Having browsed through dozens of floor plans produced by estate agents, most seem to have been drawn up by a blind rabbit, they rarely match the actual physical geography of the building. Some I’ve stood outside the building staring at the property plan trying to work out things like where on earth is the window on the plan on the real building? Even as far as: for god’s sake, which the hell side is the road on the plan?

Jonathan Harston
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Jonathan Harston

When I came back from Hong Kong I was bemused at the UK not selling by footage. I want the most house for the least money, so my almost primary consideration is the per-footage price, otherwise how on earth can I tell what I’m paying for?

Especially when you can get four floors of Victorian house for half the price of two floors of new-build. I’ve looked around newbuilds, there isn’t even anywhere to put the vacuum cleaner!

literate3
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literate3

I want a house/flat to live in: the first time I bought a dwelling it was the flat in which I had been living for several years. The company providing a mortgage insised on a survey by a particularly unpleasant young man who treated his assistant like dirt and got multiple things wrong (even the number of sinks in the kitchen) and, because I had to leave them there to go to work, left the french windows open so anyone could, in theory have walked in to steal my possessions. Per-footage is treating Manchester United’s pitch as the same size… Read more »

CJ Nerd
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CJ Nerd

Ohhhh, look!

https://spec.co/

Spec, the firm that produced this report, handily provides professional services that address the problem!

timworstall
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timworstall

I had a quick look for that myself and couldn’t spot it. So well done. It was my assumption about the story….