Price Per Square Foot?

[jackimoya]

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.

 

[hastalavista]

Buyers probably do look at $/sf (sale price divided by size of home). That is all the components wrapped up into those two factors. And, they look at that $/sf as an element of comparison, not as a unit of value (as a rule.... most home buyers/sellers I encounter think in terms of total price first, and then may test their offer against a $/sf metric to see where it fits).

We effectively do the same thing except we breakdown the components. And our unit of value (we adjust sale price) is the same that the typical buyer/sellers think of (total price).

I've yet to encounter a buyer who says, "I'll offer you $25/sf less than what you are asking."
I've seen plenty of offers presented at $50,000 less than what was asked; and the counters that come back are based on "price" (a counter at $25k higher) and not "$/SF" (a counter at $10/sf higher).

Edit to add:

When you say

...a lot...

, "a lot" means "many" and not "a parcel", right?

 

[Elliott]

I usually, say, 'yeah SP/SF is always interesting, but there's a grid under SP/SF that makes adjustments, which is more reliable than an unadjusted average.'

 

[CindyR]

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.

And I say "Really?? you have buyers that come to you and say "we want to buy a new house but we just can't go over $120 per SF."

Someone on the forum years ago said it would be like buying a new car based on $ per pound...

 

[glenn walker]

This is typical Realtor Methodology -Appraisers tend to think Realtors are talking price per square foot of gross living area BUT the Realtors around here include everything including the land and divide it by the gross living area and that's their sale's price per Sq.Ft. But I do admit I buy hamburger by the pound and get screwed a lot because I don't know good meat from bad meat and that's why I'm not allowed to buy meat or purchase homes.

Example :Realtor Sale's Price Per Sq.Ft

* Comp-1 Single Story Ranch.
* Gross Living Area=2,000 Sq.Ft.
* Age-1955
* Three Car Garage
* Pool & Spa
* Lot Size- 10,000 Sq.Ft.
* Sale's Price- $500,000 = $250.00 Per Sq.Ft.

Comp-2 Single Story Ranch
* Gross Living Area=2,000 Sq.Ft.
* Age-1970
* Two Car Garage
* No Pool or Spa
* Lot Size -20,000 Sq.Ft.
* Sale's Price-$500,000= $250.00 Per Sq.Ft.

 

[gregb]

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?

 

[Randolph Kinney]

Adjusting for GLA differences between the subject and comps are not direct from the price divided by GLA.

 

[Terrel L. Shields]

Lazy agents use SF like drunks use lampposts, for support, not illumination.

 

[Michael S]

When I browse the listings in an area I'd eventually like to buy a home in I will look at price per SF as it gives me a quick reference point. I know I will probably need around 2,000 SF, maybe a bit larger. If I'm seeing prices less than $100/SF I know it's relatively cheap and it's usually an older house that's dated. If I see something at $150/SF I can just skip right by it because I know that will be out of my price range.

 

[Deleted member 128537]

I sold real estate for 5 years and never had anyone do that. Most buyers are not that analytical. Maybe in very homogenous neighborhoods they would think that way. But honestly in my market price per square foot is all over the place.