Appraised sq ft is 22% smaller than advertised

[Albert Chen]

Hey friends, hope someone can give me advice.

I'm in escrow and 2 weeks away from closing on a 3/2 SFR in San Francisco. I'm a first time home buyer, and it's an as-is offer at 4.3% above list price. I like the house very much and it appraised, but just found out that the appraised square footage is 22% (404 ft) less than advertised.

Seller used tax record to advertise the sq ft, and is an investor/flipper, so they likely bought it without an appraisal and can claim they didn’t know. My problem is that 22% seems like a ridiculous amount to overstate, especially if you are in the business of renovating and flipping houses, your job IS to know the opportunity cost. They redid the entire house with laminate, so I feel it’s a fraudulent act to over-advertise despite what the tax record says.

Homeowners who are not investors obviously use price/sq ft as a pricing standard, and I feel that the comps used to justify prices were used against my favor in the negotiation phase. I could understand variance with even +/- 10%, but 22% seems malicious to me.

My agent said I can either bow out and try to fight for my earnest deposit or try to lobby for a reassessment but some internet research tells me that sellers usually tell buyers to f-- off. I really hate the argument that “it’s the same house you wanted to buy, nothing changed.” It really ignores the bargaining power that 404 sq ft provides when soliciting offers. That’s the size of someone’s condo in SF, are you kidding... And if I ever sell the house, I’d be stuck between the morality of posting tax record sq ft vs. losing value with appraised (real) sq ft.

Anyone ever been in these shoes and actually negotiated a discount of some sort? Case law seems to be against my favor since the tax record is what the seller used, but wrong is wrong. Ideal outcome for me would be to propose a reassessment of price in the form of a rebate, in any amount, I would feel a lot better about this.