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Ginger & Tom…, Real Estate Pro in Tampa, FL

Here is a question for my fellow Realtors. What would be a good (valid) answer when a seller tells you about a house down the street that's?

Asked by Ginger & Tom Perkins, Tampa, FL Wed Mar 17, 2010

basically equal to theirs except it is smaller and sold for more dollars per square foot. Generally it has been my experience that realtively equal but smaller homes usually sell for a higher dollar per square foot.

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Ginger & Tom,
Yes, we've all been there! You are right that statisticly the smaller home, equal in tangible assets to a larger home, will sell at a higher SP/SF. I am not clear if the subject home is your listing, a potential listing client, a FSBO or listed by another agent. My comment pertains to your listing or potential listing client. For the others, let the purchase negotiations speak for you. Nothing is real until a purchase contract is presented. Buyers and sellers often don't adjust to reality until the best deals for them have vanished.

Unfortuneately, statistical data rarely influences the person presenting this question. They have a different need that must be addressed. You must determine if the need is lack or motivation or seeking greater assurance.

In addressing the question presented, I like to start with the statement, "My home buyers repeatedly say they will know the house to buy the moment they open the front door." In essense, the decision to buy is emotional, justification to buy is in the statistics. Predicting what emotion will be activated by an individual buyer is well above my pay grade. To a home buyer, a home that says, "HELLO" is of greater value than the pool and themal windows. The giant Florida Oak that shelters the home is a asset to one buyer and a hazard to the next.

Lastly, if you apply the home down the street SP/SF to the target home, then do a comparable, the target home should be at least 10% above comparable list prices. We know what happens when you exceed 10% of the buyers value bracket. The DOM pyrimid and the potential for further downward market adjustment equate to a fatal error in pricing.

Have a exceptional 2010!
Annette Lawrence
ReMax ACR Elite Group, Inc
727. 420. 4041
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1 vote Thank Flag Link Fri Apr 23, 2010
Have you checked out the house down the street? could be numerous reasons as to why the house down the street sold for more money. There could of been amenities, well maintained so the buyer(s) were willing to offer more, etc... upgrades. Hard to pin point exact reason why the house down the street sold for more but you should maybe research, since there can be so many variables.

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1 vote Thank Flag Link Wed Mar 17, 2010
Had to comment.... another way to analyze this is to separate out the "lot value" from the house. If you assign a certain value to the lot and deduct it out of the value "before" computing the price/sf then you will almost always end up with a lower price per square foot for a larger home in the same (higher quality) neighborhood.

Over the past 10 years as a Realtor I've always disliked the simplified approach of using the price/sq ft to estimate a value for a property. An appraiser doesn't compare properties this way, Realtors should not also use this defective method of comparing property values. I know some Realtors may use the Pr/SF to their advantage to attempt to get an easy sale with a lower asking price. I am now recommending (in this declining market) that a seller pay the $350 and get a full appraisal from an experienced appraisal knowledgeable of the neighborhood. That way the appraisal will give the owner a very educated idea of value and it also helps me should I ever get a disgruntled seller who thinks they listed their house too low!
0 votes Thank Flag Link Sat Apr 24, 2010
The perpetual comment.

So.,....using that line of reasoning, if a house is twice as big as this house, and it's in the same neighborhood, it should sell for double the price?

I keep thinking of the law of diminishing returns and how it can be applied when computing market values by square footage.

So many possible responses: any upgrades? staged? curb appeal? timing of the sale? any credits?
0 votes Thank Flag Link Sat Apr 24, 2010
In this instance you show them the facts. If an appraiser used that house for comps they would adjust value for the discrepency in square footage. Smaller homes sell for more per sq.ft. and larger for less per sq.ft. in a given neighborhood with similar finish out. Or to simplify, the neighbors house value does matter but not the price per sqaure feet since they differ. best of luck
0 votes Thank Flag Link Fri Apr 23, 2010
My answer would be "so what?" As a buyer's agent I never ever ever ever ever agree with any pricing information provided by the seller's agent. My job to get the best price for my buyer, not to sit politely with teacups on our laps discussing anything as meaningless as comps or market data. The absolute LAST thing I would ever do is agree with, or appear to accept, any information that does not support my offer. To quote Keenan Wynn in the movie "Sunburn" (Charles Grodin, Farah Faucett, 1979): "Gentlemen, we're not here to face the facts, we're here to change them." Again, I'd politely and with all respect say "So what? Now when can your client sign our offer?"
0 votes Thank Flag Link Fri Apr 23, 2010
There is often at least one aberation in a CMA, in my experience. The Selling price for the smaller home could have been the result of a Buyer that "fell in love with the house" or someone who wanted a smaller house (less home to care of).
0 votes Thank Flag Link Fri Apr 23, 2010
Hi Ginger!

You can probably find statistics that will support the truth of the matter that smaller houses within the same neighborhood almost ALWAYS sell for a higher price/sf. It's the price of admission to the neighborhood. Especially a very nice manned gated neighborhood like Chapman Manors/Windsor Park.

So, I would go to various neighborhoods on the MLS (i.e. Westchase, Tampa Palms, Waterchase, The Eagles) and you should be able to get a report of SOLD properties and show it to the seller to prove your case.

I look forward to our closing later this month! It's been great working with you and Fifika!

All the best,
0 votes Thank Flag Link Thu Mar 18, 2010
I believe Mark and Christopher are correct. Any number of things can determine why, when and for how much someone will purchase a house. It could be something as simple as the Sun rising on the correct side of the house for that buyer, the view, the topography of the lot, or the colors/decorations of the interior. My best suggestion would be to knock on the door of the house down the street and tell them who you are and ask to preview the home. If you build some rapport with them maybe they'll let you bring your potential client in to see the differences for themselves. If you don't get this listing at least you'll be armed with the correct info for the next seller you talk to in that neighborhood.
0 votes Thank Flag Link Wed Mar 17, 2010
Hopefully, when you spoke with the sellers you already had the neighborhood comps and already knew about the selling price of the house down the street. If you've been previewing the neighborhood, then you would also know what the inside of the house looked like, and what type of amnenities where included. With those facts in hand, it would help you explain why a home sold for a different price.
Of course there are also different motivations for selling a home and buying a home. Maybe the house down the street had a buyer that could not possibly live without purchasing that home, and paid a premium for that reason.
0 votes Thank Flag Link Wed Mar 17, 2010
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