One of the trademarks of an experienced real estate investor is having the ability to quickly and accurately determine the square footage of a potential real estate investment. Homes are both evaluated and listed in the multiple listing service with the appropriate square footage of the property.

But it’s not always as easy as it sounds when calculating the square footage of a property. In fact, you’ll often see a caveat underneath a property listing regarding the reported square footage that reads something like “information is deemed reliable but not guaranteed.” Basically that means the person advertising the property for sale doesn’t want to get sued if the property isn’t as big or as small as stated.

That’s important to know. Why? Say you’re looking at a home that’s 3,000 square feet, according to the seller and you’re considering a $200,000 offer. That works out to just under $70 per square foot. But you and your appraiser inspect the property and come up with a much different measurement: 2,200 feet. That’s more than $90 per square foot, essentially eating up your expected profit. What happened?

It can be a simple situation of a mistake when measuring the property or the seller included areas that banks don’t consider to be part of the square footage calculation. In this example, there’s about 800 square feet missing somewhere, so where did it go?

Banks don’t consider areas that are considered non-habitable. That means the area must be heated, cooled and have access to utilities. A two car garage is not considered habitable areas. Neither is an outside deck or a separate building on the property if the building doesn’t have electricity, heat or utilities. Either of these and other areas is the likely culprit for the missing 800 square feet.

When evaluating a potential investment, pay close attention to the square footage number early in the process. Finding out later that your property isn’t as big as you thought it was will rob you of precious profit.