Price per sqft vs appraised value

[shrubberyvaluation]

A- with or without the land value included? Land is valued (or should be) as if vacant and available for its highest and best use. Outbuildings, pools, shops, etc. should be considered separately. Site improvements ditto. Garages ditto, so the SF value should reflect ONLY the GLA - gross living area.

B- I know that building costs are high in California. But the soft costs are a lot of the reason. 2"x4"'s don't cost much more there than in Kansas or Florida. Soft costs are the thousands spent on permits, inspections, etc. But the actual "building cost" is probably not much over $200, but even if $300, that means $200/SF relates to the land value...

Using distant comps in lieu of closer comps is an issue and there needs to be a justification for doing so.

Using more distant comps could be an issue, or it might not be. If the subject is near a major rd and those .5 mile proximity comps are on the other side of that road they could be different. I have used comps over 1 mile from the subject that are in the same community rather than very proximate comps outside of the community that either have superior or inferior market appeal. In general more proximate is better, but not always.

 

[djd09]

conservative is code for soon to be fired

 

[Tom4value]

Sometimes we let our education get in the way of good appraising. Our eyes are “on the book” and we are not looking at the buyer. In commercial property and residential property purchased strictly for income, a buyer will put heavy weight on the cap rate and price per square foot to come up with a price they will offer. However, a buyer of an owner-occupied home, where they lay their head at night, price per square foot is not factored into their offer at all. I bet if you ask them about price per square foot, they will say, “who cares? I am buying the whole house, not just a few square feet!”

For appraisers of these properties, price per square foot is nothing but a secondary tool to check your work if something seems out of whack. In track housing, with plenty of sales of very similar homes, you may find a good pattern; if your subject is out of the norm you may want to look again at your work. However, in a type of property that is driven mainly by “buyer love” (waterfront, antique, unique size and amenities), price/sqft is pretty much useless.

 

[Jayjay25]

SFR appraisals are NOT based on "price per square foot". Its a stat that realtors apparently have a fetish for but is one that is incidental at best to the appraising process.

Looking at price/sf alone is not going to tell you if your appraiser used the best comps or not.

I like to tell realtors that pricing a house by the square footage is like trying to price a car by the pound. Which is worth more a Porsche or a Volvo…

 

[jay trotta]

Were there any features where all the sales were adjusted downward? The problem with price per square foot is that it reflects all aspects of each sale, and if the subject doesn't have some features, or has less of them, then overall price per square foot could be lower. Also, please explain "ssentially the comp came back at purchase price + exact cost of the remodel."

Interested in the explanation also...

 

[Bob Ipock]

Houses sell by the features....not just s/f. Same as cars Cars do not sell by the pound.