Price Per Square Foot?

[gregb]

CPA's and engineers tend to opt for units of comparison, such as cost or price per square foot.

 

[J Grant]

CPA's and engineers tend to opt for units of comparison, such as cost or price per square foot.

CPA deals in numbers and engineers in building costs or weight loads . In res RE, price per sf is too variable for a reliable unit of comparison, though like any unit, it can be used for analysis.

 

[J Grant]

Price paid per square foot is a unit of comparison examined in residential income properties, why should single family residences or condominiums be spared from a similar comparison?

Because in res income properties, sf is linked more directly to rental rates? And investors of res income properties have different motivations for their price than res home buyers looking to live in and enjoy amenities.

 

[ucbruin]

Good and seasoned agents probably don't push p/p/sf....

 

[J Grant]

I've had quite a few real estate agents tell me that buyers use price per square foot a lot when looking for/offering to purchase properties. Which has led me to question, if we are to reflect buyer's reactions, should we be addressing price per square foot? I know it is on the grid, but to be perfectly honest, I've never addressed/analyzed price per square foot.

I sold RE before becoming an appraiser. The truth is, RE agents use $ per sf to price listings ( why so many prices are "off") and use it to convince buyers of prices. And though buyers rely on it to an extent, most buyers don't arrive at a price or purchase decision that way.

RE agents include in price per sf include lot, pool, site amenities . Price per makes more sense for a condo, where the sf of the unit does not include land or site amenities. But even there it is unreliable, as RE agents/ builders) lump together units with views and units with no views, upgraded units with plain units to arrive at a $ per sf avg. It is a unit of comparison of some interest on the sales grid.

I hate it when RE agents say "houses are going for $200 a SF ".

 

[bnmappraisal]

I hate it when RE agents say "houses are going for $200 a SF ".

YUP! and I get it often enough from many (seasoned AND rookie)

I do consider the price per s/f at the end - meaning: I'll look over my comps and my OMV and look at what my subject's price per sf is in regards to the comps. If comps are (i.e.) $125-$150/sf and my subject is at $50/sf or $200/sf (extreme example) ... then something's wrong

 

[Doug Wegener]

I sold RE before becoming an appraiser. The truth is, RE agents use $ per sf to price listings ( why so many prices are "off") and use it to convince buyers of prices. And though buyers rely on it to an extent, most buyers don't arrive at a price or purchase decision that way.

RE agents include in price per sf include lot, pool, site amenities . Price per makes more sense for a condo, where the sf of the unit does not include land or site amenities. But even there it is unreliable, as RE agents/ builders) lump together units with views and units with no views, upgraded units with plain units to arrive at a $ per sf avg. It is a unit of comparison of some interest on the sales grid.

I hate it when RE agents say "houses are going for $200 a SF ".

I sold Real Estate also for about 5 years. Agents do indeed price homes on a PSF basis. And many do not understand that as the size of the home goes up the $PSF goes down.

$PSF analysis,like ranking, can be useful if used appropriately.

 

[RSW]

I sold Real Estate also for about 5 years. Agents do indeed price homes on a PSF basis. And many do not understand that as the size of the home goes up the $PSF goes down.

$PSF analysis,like ranking, can be useful if used appropriately.

That is so true. I recently did an appraisal on a 2 story home which had a little over 2,600 sf of GLA. Most homes in the subdivision were between 1,800 - 2,000 sf. They were selling for about $113/ sf. That is how the agent came up with a listing price. I found sales of homes similar to the subject which sold for $95/sf. The only answer I could come up with was that the more GLA were selling for less/sf.

 

[Mark K]

And many do not understand that as the size of the home goes up the $PSF goes down.

I'd agree with this in cookie-cutter or production homes. In custom homes I've found the opposite is true after an 'average size' is reached and in this area, custom is about 50%+ of available homes. Unit price starts out high for small houses, levels out for the average, goes back up for the large homes.

I have to admit that I've been looking at homes/condos in other areas for retirement/vacation property. When skimming over the homes, I've found myself looking at $/sf overall, if for no other reason than to rule out certain properties. As an appraisal tool, I've never found it very reliable.

 

[Tim Hicks (Texas)]

That is so true. I recently did an appraisal on a 2 story home which had a little over 2,600 sf of GLA. Most homes in the subdivision were between 1,800 - 2,000 sf. They were selling for about $113/ sf. That is how the agent came up with a listing price. I found sales of homes similar to the subject which sold for $95/sf. The only answer I could come up with was that the more GLA were selling for less/sf.

That is because the lot size and value is not increasing at the same rate. Most have the same size lot with the same value, but as the home gets larger the rest of the property does not and the price per foot is for the entire property.