I can’t tell you the number of times I hear home-buyers, sellers and Realtors talk about the value of a home using the price per sq foot methodology. Prior to my moving to Arizona, I sold real estate in Illinois and the sq footage equation never came up. Perhaps because most of the homes where I had lived were custom and it was rare to find two alike. I find the price per sq foot concept is largely misused.
“The most common thing I see people do is they take the square footage of a home right off the MLS sheet, find the average for the neighborhood, take the number of square feet of the subject property, multiple and come up with a price. Now the odds of that being correct are about the same as Zillow being correct.”
I am married to a real estate appraiser so I tend to think more like an appraiser than a Realtor when preparing a market analysis to determine the value of a home. What I DO know is that the price of a home is not determined by price per square foot according to appraisers, value is determined by comparing apples to apples the cost approach method.
Here is an example of what I am talking about. First, livable square footage of the home equates to just that, however there is more that goes into the square footage price than the exact square footage. The land cost has nothing to do with livable square footage however the land price goes into the final sales price. Whether you have mountain views or golf course views plays a huge part in determining the value of your home, that is calculated into the square footage. Condition isn’t linked to square footage, but it can account for the majority of the value. A house can have high quality updates or inexpensive finishes, that will change the price per sq ft. Curb appeal, lot placement, all contribute to the value differences from one house to the other.
For example, A and B homes have the approximate sq footage and very similar interior finishes, A has an extra half bath, B has better curb appeal , both A and B have mountain views but A view is far more superior, and A has a 3 car garage where B has a 4 car garage, the price per sq foot will be most likely be different?
These factors below determine market value between one home and another. ( assuming sq footage is the same)
1. Elevation of the home
2. Mountain views vs golf course views
3. Lot location such as cul-de-sac, corner lot, backing up to road, backing up to wash, backing up to power lines, backs to busy road, no privacy such as 1 story backs to a 2 story home, backs to school or commercial property
4. Two-Story homes (hillside, walk out basement vs traditional 2 story vs single story
5. Interior and exterior condition
6. Lot size
7. 3/4 car garage vs 2 car garage
8. Steep driveway vs flat driveway
9. Pool vs No Pool
10. Outdoor living space and amenities (very desirable in AZ)
11. Brick paver driveway vs concrete
12. Tile/wood vs carpet
13. Granite countertops/quartz vs formica
14. Kitchen size and storage
15. Flowing open floor plan vs chopped up floor plan
16. Vaulted ceilings vs flat
17. Number of bedrooms/baths
18. Manicured landscaping
19. Updated lighting and fixtures
20. Media room, wine cellars
21. Age of home
Are you thinking of selling? Do you need help in determining your home’s value? Feel free to contact me by phone, text, email.