What’s “in” the square feet is more important than the price per square foot!
Try to figure out the price per square foot of this home!
Realtors®and consumers often view price per sq. ft. as the ultimate way to determine a home’s value.
But, there’s much more to determining value than the price per square foot!
Thanks to the internet, there’s a lot of data available these days.
Price per square foot is just one of those internet data elements and it’s often misleading.
Here’s Why . . . .
Incorrect Square Footage
- Sellers, and their listing agents, sometimes misstate a home’s square footage.
- That can happen when agents, assessors, and/or appraisers measure a home while using different methods.
- Some homes are purchased with unfinished square footage that the owner completes later.
- Some sellers, and their listing agents, will include that extra unfinished square footage to achieve a lower, more attractive price per square foot in their listing.
- And, some homes “grow” each time they’re sold because successive sellers convince their listing agent that the home included “X’ square feet when they bought it.
- Listing agents often take the seller’s word for it without checking the public records for accurate info.
- A single-story home will usually have a higher price per square foot because it has a bigger footprint, more roof area.
- Single-level homes are often smaller than multi-level homes, resulting in the major construction elements being apportioned over fewer square feet.
- That pushes single-level homes’ price per sq. ft. higher.
- A multi-level home will usually have a lower price per square foot because it costs less to build than a single-level home.
- It’s also common to see larger homes with unfinished living areas have a lower price per sq. ft.
- In general, smaller homes often have a higher price per sq. ft.
- A home in pristine condition will usually have a higher price per square foot than a comparable home in poor condition.
- Homes that have the latest amenities and upgrades will almost always carry a higher price per square foot than a home that has laminate counters, golden oak cabinetry, and linoleum floors in the living areas.
The bottom line?
I view price per sq. ft. as just one piece of the puzzle.
Price per sq. ft., while somewhat useful, is not a reliable indicator of value by itself.
What’s “in” the square feet is far more important than the price per sq. ft.
FWIW: Appraisers ignore price per square foot when appraising homes.