Alright, esteemed Active Rain Realtors, I have a scenario I wish to run by you, and am looking for your feedback.

First, a bit of background history...

My husband and I have a rental house in Medford, Oregon that the tenants recently moved out of. When they gave notice, we discussed various options. Shall we just sell it since we were planning to do so a year from now anyway? Shall we move in to it since our youngest will be attending a school 4 blocks from the rental next year? If we move in to it, do we rent our current residence or sell it? At this stage of our lives, we're not interested in accumulating rental properties.

We decided:

Plan A would be to market our current residence For Sale By Owner so we wouldn't offend anyone by choosing one Realtor to represent us over another, and move in to the rental when the tenants were out

Plan B would be to continue to market our primary residence AND try to sell or rent the rental once the tenants moved out. This way, we'd hold down the expenses, since we have a mortgage on each home.

I've kept a close eye on homes in our neighborhood, and put our home out at what I thought was a reasonable price, based on the last sold and closed home, and comparable listings, staying well below all of the homes I looked at. Not much activity in this neighborhood, which does not usually experience much turnover. So, I put first one home, then as the tenants moved out, I put the other home out there. No calls amounting to anything for sale, MANY calls for rent, and we ended up re-leasing the rental house with only 4 days of lost rent and will be staying in our current residence.

My walking partner has a friend whose husband is a Realtor. She asked him about a listing we thought was his - turns out it wasn't - in the same neighborhood as our primary residence. That home went under contract way below what things have been selling for.  He made the comment to her that "things are selling at $165 per square foot".  I've heard reference to this philosophy from Southern Oregonians before, most of them first time home buyers but some of them real estate brokers. But, I didn't think to ask the real estate brokers until it touched so close to home.

This California transplant just doesn't GET this philosophy!

One of my first memories in the finance industry was from when I worked at World Savings, and trying to grasp the appraisers' issues with "inverse land ratios" - land value being higher than the value of the home on it - in the high cost areas we covered. A long ways away from "price per square foot" on a resale home. I understand the concept of using price per square foot on new construction cost approaches, but on resales? How does price per square foot address neighborhood, view, upgrades, lot size, condition, age... so many variables?

Would love to see your comments on this!