Price Per Square Foot ~ A Good Way to Buy?

By
Real Estate Agent with Adams, Cameron & Co., Realtors

Kristin Petersen Broker Associate Exit Beach RealtyRecently,

 

I had a client that compared every home he saw on the basis of price per square foot.  Although I was happy to have a client that was educated and seemed interested in the analysis end of real estate, I had to explain to him that this is a very skewed way of looking at the market.

Price per square foot on recent sales is not indicative of what the home he may be interested in should sell for...why?  Because the price per square foot of the comparables may include features (or not include) that the home he wants to buy has or doesn't have.  The sales price divided by the square feet of the home takes into account the pool, fireplace, tennis courts, 3 car garage and any other features of the sold home.  The home he wants to purchase has no tennis court and a 2 car garage. 

One would need to extrapolate the market value of those items that are not comparable and then figure what the true price per square foot is of the actual homes in the market area.  Then you could use the price per sqaure foot as a guide to what the value of the property is.

Once I explained this and was able to correctly decipher the per square foot charge of the home, it just made my buyer realize the importance of working with a qualified and seasoned real estate agent....which made me feel good!

Still haven't written an offer, but proved my worth!  That's a feel good day!

 

Posted by
Kristin Petersen is an award winning real estate agent at Re/Max Property Centre located in Ormond Beach Florida .  With over 20 years experience, including real estate finance and appraisals,  you are in good hands.  NOTHING Beats experience! Contact Kristin Petersen today.  
 
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Comments (6)

Susan Emo
Sotheby's International Realty Canada - Brokerage - Kingston, ON
Kingston and the 1000 Islands Area

Good for you.  These "C" personalties are difficult until you speak their language.  Well done and I'll congratulate you now on what will soon be a sale!

Sep 01, 2010 06:13 AM
Harry Logan
RE/MAX executives realty - Winnipeg, MB
Your Satisfaction is Guaranteed!

Great Point Kristin! 

I get this all the time with apartment block investors, asking what's the price "per door" and doing valuation based on a per unit basis.  I am sure that I don't have to tell you that there can be huge differences between a bachelor suite "door" and a 3 bedroom apartment "door".

Thanks for sharing your insights!

Sep 01, 2010 06:16 AM
Paul Lesieur
203kloanmn - North Oaks, MN

I always get asked the price per square foot questions, and its OK for conversation but not when spending real money. I use a simple analogy like whats the cost of a window.

A 10SF window installed is $500.

A 10SF window installed on the second floor is $600

A 10SF window installed on the 3rd floor is $700

In other words, depends on the circumstances.

 

Sep 01, 2010 06:20 AM
Kristin Petersen
Adams, Cameron & Co., Realtors - Ormond Beach, FL
Realtor - Daytona Beach, Ormond Beach - Ormond by

Glad to hear I'm not the only one out there hearing this all the time!  Thanks for your comments!!

Sep 01, 2010 06:24 AM
Mike Wong
Keller Williams Realty Southwest - Sugar Land, TX
Realtor: Commercial, Residential, Leasing, Invest

Great way to educate your client Kristin. I had a high "C" personality looking at properties the same way last year. I could not argue about it with him and his wife, price per square foot was the absolute factor and it was difficult because they were looking to purchase a base home in a community of upgraded homes. The prices just did not reflect the lack of upgrades because the market area was a hotspot.

Sep 01, 2010 08:30 AM
Letitia Stevenson
BHHS Fox & Roach | www.DelawareValleyRE.com - Greenville, DE
Listing Agent DE/PA/MD, Digital Marketer & Coach

Kristin,

Welcome to the Rain! Active Rain is a great place to share your knowledge, expertise and thoughts, as well as network and learn so much from the vast pool of talent already onboard.

Welcome Aboard and Much Success!

Sep 03, 2010 12:47 PM