Big D's Real Estate Institute

Ever read a real estate listing that sounded like this - "rare opportunity to own a charming loft residence home" - only to discover that it's describing a 300 square foot studio overlooking the entrance to the Lincoln Tunnel? As with online personal ads, real estate descriptions are filled with code words; nothing says you won't find much space in a particular apartment than the word charming. (Disclosure: I hate charm filled apartments).

Sometimes, however, charm is all you can afford, so the real issue becomes, how much charm can you afford? For this question, price per square foot should be a key factor in your due diligence. The simple example is a 1000 sf apartment selling for $1,000,000, or $1000 psf. Just a few years ago, $1000 psf was seen as the benchmark of luxury, a plane only the most exclusive and desirable real estate could generate. Not any more. Today, luxury units in Manhattan sell for far above $1000 psf (here's a 3900 sf duplex selling for $4.975 million) while even mundane studio spaces often creep past the former benchmark (here's a large but unremarkable 748 sf studio selling for 769k).

If the prices aren't enough to make you weep, trying to get an accurate square footage determination will. Determinations of square footage are notoriously inaccurate; in this building, square footage includes the percentage of elevator and hallway space attributed to each unit - a fact buried in the fine print of the prospectus. The result in this case was to make the price per square foot of livable space go from $1230 to $1393. Not only are you paying more per sf, but your monthly maintenance payments are impacted since they are based on square footage. There are standards for measuring square footage, but in most cases they serve as guidelines, not requirements.

What should a buyer do? For one, bring a tape measure with you when seeing a unit. During the recent boom, such an act would have been seen as foolish, now, however, since it appears that the market has cooled down a bit - inventory is up and apartments are taking longer to sell - a big discrepancy in square footage may be a bargaining chip in your favor. By using a psf standard, it also becomes easier to compare the cost of housing in different neighborhoods (and cities). Mostly though, accurate psf's allow you to make a more informed decision and when you're spending this kind of money, information is key.

Next time on Big D's Real Estate Institute - Co-ops: The Gated Communities of New York. What do co-op boards call dog owning lawyers? Renters. What do they call Puerto Ricans? People who don't live in my building (Spics also acceptable).