Q & A Saturday – Should I Use Price Per Square Foot to Value My House?

Welcome to our Q & A Saturday video.

In these Q & A Videos we will answer your questions about real estate.  Any real estate related topic from questions about selling your house, buying a house, real estate investor questions, land lording questions, local market questions and many others things are all fair game. 

Today’s question is “Should I Use Price Per Square Foot to Value My House?

Price Per Square Foot Mistake - Massachusetts and New Hampshire Real Estate

In this video Shaun talks about how a price per SQFT number relates to the value of your house.

 

Some of the main points covered in this video are:

1)      What exactly price per square foot is.

2)      Limitations of price per SQFT.

3)      How price per SQFT usually changes with the size of a property.

4)      The situations where it can be useful.

5)      Some other methods for valuing that we’ve discussed before.

 

Valuing a property using the price per square foot method is usually a very poor way to find the value of a property.  This number generally will not account for the location of the property, the size of it, the current condition or any other number of important factors.  Even when using more targeted versions of the number that might only include places that sold within some parameters it still very rarely accounts for all the different factors.

One of the most ironic parts of using the price per square foot method is that even with everything else being the same; it is only good if the places are very similar in their square footage!  In general if you have places in the same area price per square foot will get lower as a place gets bigger.  So even once you adjust for everything else if the two places differ in size by a large amount price per square foot will still not give a very good estimate of the value.

So the only instances where this method works is when you have properties in the same location, with extremely similar condition and level of finishes that are also very close in size.  Anything else is just a poor representation of value.  As mentioned in the video one example that could use this is a condo association with a couple different size units that are still pretty similar.  The case we have was a situation where we have a place in a complex with 2 different sizes for small 2 bed room 1 bathroom units.  We have one of the bigger ones that are only about 5% larger.  So if we wanted to value our unit and none of that size sold but several of the slightly smaller ones sold.  If all the places were in similar condition there isn’t much else to adjust for other than the small size difference so the only adjustment needed would be a small bump for the extra space therefore this is not a bad way to do it.  That being said in the same complex using the 1 bedroom units that are only 60% as large would be of no value to use price per square foot because there are other important factors to consider.

 

Do you need to sell a house in Massachusetts or New Hampshire and not sure how to value it?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

Hope you enjoyed the video and leave any other questions you have about the topic below or any other topics you would like to see covered in future videos.  I encourage anyone that has things they would like to talk about to let me know what they are.  You can always fill out a contact us form here and put Q & A in the subject, just leave a comment with your questions below here, send an email to info@masshomesale.com, or post it on our Facebook page or Twitter account.

 

Some useful resources:

–          Last week’s video on valuing property with The Assessed Values.

–          Our Video on how Inaccurate Zestimates are.

–          If you want to sell a house in Massachusetts or in New Hampshire we can help.

 

 

 

 

(Image credit: Price Per Square Foot Mistake via The Valley of Hearts Delight)

 

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