In the world of real estate, it is very common for homes to be valued by their square footage. Understanding the way a price is set per square foot and how it works is seeing and understanding the market value of properties.
The Square Footage Within A Neighborhood:
There is never one price per square footage within a neighborhood. There are other factors that are taken into consideration. One particular neighborhood might ring in $100 to $250 per square footage where another neighborhood might be higher or lower.
Square Footage With Similar Homes:
When homes are within the same location, approximately the same size, same number of bedrooms and baths, etc., they will probably come in at the same amount for square footage. But, other homes that are not the same as these other homes could very well have a very different price per square footage. These “other” homes should not be taken into consideration when forming value on your home.
Property Characteristics:
Your lot, the size of your lot, the condition of your home, the value of your upgrades, etc can have an impact on the price per square foot. A smaller remodeled home might sell for $250 per square foot, a model match fixer for $175 per square foot or another home’s specific location going for $215 per square foot. Now there is a price range from $175 to $250 within the neighborhood.
Smaller Can Be Costlier:
As strange as it might seem, it actually costs more to construct a smaller home than a larger home! Therefore, the cost per square foot is going to be higher. Trying to figure out the price on a smaller home in order to calculate the price on a larger home is not good sense. The smaller home might sell for $100 per square footage more than the larger home.
Land Matters:
Pricing a home by square footage never takes into account the land that the home is sitting on. Land is valuable and can have a huge impact in desirable locations.
In Conclusion:
Your priority should be to find similar sales and listings within a neighborhood, subtract and add value based on differences with your property. Starting off by using the price per square footage is getting ahead of yourself.
