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!