Pasadena Real Estate Q&A - What Is PPSF? And How Does It Impact My Offer Price?
PPSF = Price Per Square Foot
A question many homebuyers ask when attempting to determine an offer price for their purchase is the price per square foot(for simplification, let’s call it PPSF). When you find a home that meets most of your needs(remember it won’t meet ALL of them) -- we will review homes that have recently sold in your area and most closely match the features, size and amenities of the home you have shown interest. "Most recently" -- this will cover the last three months -- but could be six months, maybe longer depending on the home and the neighborhood.
Okay, sounds pretty simple.
If you are dealing with tract homes it may be relatively easy. You can add/deduct for locations within the development -- some may have views(add $), others may be in original condition(subtract $) while others may be appropriately updated(add $). Armed with this information, you can add/deduct for these differences. It’s not science --nor is it objective - it could be the absolute definition of a very subjective opinion. And you know what they say about opinions. Other factors come into play - starting with location, then broad appeal, time on market - price per square foot(PPSF) is just one component of a home’s price and likely not the most important.
What if the home is not tract home? The homes you will see in Pasadena are, for the most part, not tract homes -- there is a wonderful architectural diversity as well as many different neighborhoods. So while PPSF is a factor, many other factors come into play -- price per square foot is only one component of a home’s price. Compare homes that are relatively the same size in Pasadena -- we may compare homes in the same area(say, ½ mile) that are within 15% of the home size you are considering.
I meet with my buyers considering an offer and review the recently sold properties. I preview homes so I can tell if there is a floor plan that does/doesn't flow, original architectural details that are/aren't intact, tasteful(very subjective)updates, restoration versus renovation and other factors. So while price per square foot is a valid component(and you will be presented with this figure) it is not the only component.
Ahh, what about condos? Well, that’s something different -- and a topic for another post.
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Michael Jacobs represents sellers and buyers of properties in the city of Pasadena and adjacent communities within the San Gabriel Valley and the northeast foothill communities within the city of Los Angeles. He can be reached at 818.516.4393 cell or michaeljacobs@coldwellbanker.com
Pasadena Real Estate Q&A - What Is PPSF? And How Does It Impact My Offer Price?
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