One of the most common questions that we get from people wanting to sell a home in Tallahassee relates to how to use square feet in home valuations. They want to know what price per square foot they should use or even worse, they already have an idea or opinion of what it should be. I'm hoping to put this issue to rest today.
Using price per square feet is a great way to generalize home values in defined areas, but this method is not very useful when trying to determine the value of a specific home. For example, we could say that homes in Golden Eagle Plantation sell for an average value of $140 per square foot, but that does not mean that a 3,600 square foot home in Golden Eagle is worth $500,000.
Home Valuations Require Much More Than Square Footage
No two homes are alike, so utilizing a price per square foot approach to determine a value rarely makes sense. In our example about a 3,600 square foot home in Golden Eagle Plantation, imagine if it were on a lake or on the golf course versus being on an interior lot. What if it had a pool (or had no pool). These features all make up components of value, yet none of them affect the total square footage of the home. Ultimately, we know there is not a way to use square feet in home valuations, rather we use it as a quick rule of thumb for groups of similar properties.
We can also use price per square foot as a rule of thumb for improvements, but any builder will tell you they will not quote a project using this method. They want to know what exactly is required (in the form of a written contract) before they will quote a price that they have to stand by. Price per square foot is purely a rule of thumb that one should use for rough estimates only.
Frequently Asked Questions Regarding Price Per Square Foot
With so many beginning buyers asking about home values in terms of price per square foot, I have created a quick FAQ video titled How Is Square Footage Used In The Valuation Of A Home. I hope it answers the remainder of any questions on this subject, if not, please use the comment box following this blog post and we will answer your questions as best as possible.
Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.