Price per Square Foot
April 11, 2007
Sometime in the late 1970s and early 1980s, "price per square foot" became a tool for agents preparing Competitve Market Analyses. It developed from just an interesting statistic into a definition of value. Professional appraisers rarely used it to determine value and many agents
misused it.
Price per square foot is arrived at by dividing the square footage in the listing or in the Assessor's records into the selling price of a property. While it is a guideline for knowing that $500 per square foot is overpriced in a $300 per square foot market area, it misses all the differences found in individual properties. An agent who uses price per square foot needs to know what amenities and qualities were in the sold homes. How are these homes really comparable to the subject property?
As someone who early in her career found it fun to check closed sales for the price per square foot, (In 1967 the average preice per square foot was $10, in 1977, the median price per square foot was $47, now it is more like $260. )I would look a home and determine if it was median in amenities or better and would throw out an off the cuff value. I knew, I would have to really examine sales, pendings and actives to do a professional CMA.
Price per square foot is interesting, but it can never take the place of a carefully considered and prepared CMA.
Sometime in the late 1970s and early 1980s, "price per square foot" became a tool for agents preparing Competitve Market Analyses. It developed from just an interesting statistic into a definition of value. Professional appraisers rarely used it to determine value and many agents
misused it.
Price per square foot is arrived at by dividing the square footage in the listing or in the Assessor's records into the selling price of a property. While it is a guideline for knowing that $500 per square foot is overpriced in a $300 per square foot market area, it misses all the differences found in individual properties. An agent who uses price per square foot needs to know what amenities and qualities were in the sold homes. How are these homes really comparable to the subject property?
As someone who early in her career found it fun to check closed sales for the price per square foot, (In 1967 the average preice per square foot was $10, in 1977, the median price per square foot was $47, now it is more like $260. )I would look a home and determine if it was median in amenities or better and would throw out an off the cuff value. I knew, I would have to really examine sales, pendings and actives to do a professional CMA.
Price per square foot is interesting, but it can never take the place of a carefully considered and prepared CMA.
posted by shirley harry at 1:12 PM
0 Comments:
Post a Comment
<< Home