Unlocking the 12 Reasons why you should Ignore Price per sq. ft.
Appraisal’s Greatest Secrets Revealed: 12 Characteristics Influencing your Home’s Value.
If you are a single family home buyer’s or seller’s agent, you had your share of conversations with buyers and sellers who want to base their purchase or sale on recent prices per square foot. This is a terrible idea.
Price per sf is like miles per gallon in a car. It is as easy to calculate as it is useless in determining fair market value. Did anyone ever offer to buy a car for $1,000 per MPG. Or has any buyer ever said to you lets offer $473.27/sf for that colonial home in Newton?
Plus in most case in MLS pin the square foot is WRONG. I just measured a home listed as 1,350sf in Needham and it was 1,750sf.
I would add a few things to Mark’s article regarding the single family market. He is in another state but the principles regarding what gives value to residential real estate apply to any real estate market, especially in our area, greater Boston and the suburbs.
The author writes that “trying to compare two properties based on their price-per-square-foot calculation is a recipe for disaster. First off, I can think of 3 very important aspects to a property that are being ignored when you try to do this:”
However, he actually lists 4 aspects of real estate
Here is a more thorough list that you can use to have a conversation and help educate your buyers or sellers.
#12 speaks to the overall market conditions (Increasing? Decreasing? Shortage? Oversupply?)
But really it is the things we can experience, the physical key characteristics that give value to real estate.
These characteristics influencing your home’s value include, but are not limited to, the following:
2. Lot size and utility
8. Size (square feet)
9. Floor plan and utility (#room/#bed/#bath)
11. Other amenities
12. Time – When the home sold
A Newton realtor who primarily works with sellers tells me most home owners have done their own research and are sure they “know” prices. They are selling one or maybe two homes in their lifetime and he is party to dozens and dozens of home sales per year. My money is on her.
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PS Thanks to Mark a broker in our 50th state for writing on one of my favorite topics