Hi Natalia.

Price per square foot for a general location - say for homes within a half mile of the "subject" property is determined by dividing the sold price by the living area square feet of the home. You usually try to gather this information for recent sales, say about 6 months back. To determine the average price per square foot for the neighborhood - the homes within the half mine, you simply calculate it from these "comps". Some of the homes are higher - generally those with great amenities or location. Others are lower - foreclosures and board ups. A good Realtor will know which homes to flat out exclude from the calculation of the neighborhood average. He/she will also know where your house fits in with the rest.

I don't think it's done like that as the opposite. All those factors (location, amenities, age, size, etc.) determine a value based on comparison analysis usually in residential real estate. That price is then divided by the number of square feet to determine the price per square foot.
Thus, the reason for one house having $200/sqft and another having $150 could be a variety of factors, there is no simple answer; each piece of real estate is unique.

Brendan Murphy
Broker, CRS, GRI, ePro
Raving Real Estate
Laramie, WY 82070

While price per sq.ft.is an effective measure in commercial real estate it is rarely used to determine a selling price in residential real estate. In the residential arena prices are set after comparing the subject property to homes having similar attributes. The number of bedrooms and baths, style of house, location, size, decor and age all play a part in the valuation process. An appraiser will only use sold comparables when determining the value for a mortgage or other purpose. A real estate agent and seller must also consider prices of competing listings when discussing at what price to list a house because that is what the buyers will be judging the home against.

The particular home you referenced was listed as both residential and commercial. The current use had been residential but there was a possibility of converting to professional office space. The ultimate value in this case was dependant on what the uses the borough would approve. Highest and best use (and price) would be commercial due to being surrounded by other commercial property.

Hello Natalia, I think Bill sort of hit the nail on the head when he said it is determined after the sale. I think it may be more of a zillow thing. It is just the sale price divided by the square footage stated on public records assuming public records are correct and that is assuming a lot. A home could have an addition, finished basement, pool, outbuildings, additonal acreage, etc that is not reflected in the least by this number. Sometimes it can be used for a comparison in subdivisions that are very similar or condominium complexes. I don't find it very useful in pricing a home. A good agent with a good CMA will put you in the ballpark and the buyers will let you know if it is right. How is it going selling your home? Did you see how fast the home we met in sold? I thought it would with that location.

Natalia,
Kind of a tough question. I know that every area is different but we do not use price per square foot to determine value often. Having said that when we do a CMA for either a seller or buyer and the home is located in an area that has many recent sales we can use price per square foot to help zero in on a listing or sales price.
All of the items you mentioned (location,amenities, and upgrades) are taken into consideration in the evntual sales price. Generally price per square foot is figured out after the sale.
Not sure that is the answer you are looking for and maybe agents in other areas use square footage as a greater determining factor and can help you out.