Home Buying in 19031>Question Details

LAS, Home Buyer in 19038

Does the price per square foot make a difference when negotiating offer?

Asked by LAS, 19038 Mon Mar 23, 2009

House is 213 per square foot and comps anre much lower

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Dear Las,

If the house is outdated, the listed price may have taken that into account. I do recommend that you use a buyer's agent to help you come up with a price that is good for you and acceptable for the seller.

You've been given a grocery list of things to consider for the price:
Other similar properties that have sold in the last 6 months - how does the sold price compare to the asking price?
Were the other homes that sold also needing updating?
Do the other homes that sold also have 2 car garages?
Did the other homes that sold need fixing up or were they move-in ready?
How does the square footage compare?
How do tne number of bedrooms compare?
Were there any additions added to the home you're looking at vs the homes that sold?

These are some of the things a buyer's agent looks at to help their buyers negotiate a good deal. I don't work in the Flourtown area but these are some of the things all Realtors goes through hours of training for. For a safety net, you can always add a contingency that the offer is contingent on the mortgage company appraising it at that value (we have that in our agreement of sale contracts but other areas may not). That way, you know for a fact that you are not overpaying for the house.
1 vote Thank Flag Link Wed Mar 25, 2009
Linda,

The price per square foot is not a negotiating factor despite what others may tell you. It will all come down to the home's condition and updates or lach there of.

Renee Porsia
Associate Broker
RE/MAX ACTION REALTY
(215) 669-0589 Direct
(215) 358-1100 Office Ask for Renee
http://www.reneeporsia.com
1 vote Thank Flag Link Mon Mar 23, 2009
Make sure you have the right comps .If you try to do it with Zillow you probably get bad comps most of the time.The price per sq.ft. is determined by several factors .I will mention a few.
You have to know the neighborhood and the condition of the homes,the type of home,the view,lot size and age.Older homes might have been either neglected, or completely renovated.
If you are unsure and don't want to use a realtor, use an appraiser.For approx $ 400 you know what the right price is.
When you put an offer in, use the price per sq.ft. you like to pay and see what happens. You might get lucky or loose the house.
1 vote Thank Flag Link Mon Mar 23, 2009
Indirectly, it does have some bearing on the price. As mentioned before, your buyer's agent can do a search and find what comparable homes sold for in the last 6 months - same as an appraiser would. Part of the search is on square footage but other things also enter into the comparisons. A buyer's agent sounds like someone who could really help you here.
1 vote Thank Flag Link Mon Mar 23, 2009
Linda,

I always get asked this question and I say no. This is a discussion you should have with your buyer agent.

Do you have a buyer agent? If not, I would advise that you hire one before you do anything further.

What matters when you put an offer in is the most recent comps in the area that are similar to the home you are wanting to purchase as well as how much work needs to be done inside the home as well as if it is updated.


Renee Porsia
Associate Broker
RE/MAX ACTION REALTY
(215) 669-0589 Direct
(215) 358-1100 Office Ask for Renee
http://www.reneeporsia.com
1 vote Thank Flag Link Mon Mar 23, 2009
Hi Las-- If you are not working with a buyer's agent, do so- there is no cost to you and you will have someone on your side to explain how to arrive at a fair price.

That being said, I DO look at price/sq ft when we are looking at several properties- BUT that is only the first step. I look beyond that number to evaluate what justifies the $/sq ft --does the lower one have any faults, repairs or why is it that $$, does the higher one have upgrades, more land, ect. Its part of the BIG picture of pricing a home.
0 votes Thank Flag Link Wed Mar 25, 2009
I prepare estimates for banks on value based on condition vs. recent sales in direct area. I can get one toghether for you within 1 day and would be willing to go out and see the property for you.

Of course, if you have already seen the house the listing agent may not honor that you now find a realtor to work with you. Details would have to be worked.

Send me an email to bounce some questions and facts around.

Have a great day!

Kevin Van Horn
kevinv@premierreo.net
0 votes Thank Flag Link Wed Mar 25, 2009
LAS,

Square footage is definately a consideration. However, as mentioned, there are other factors that carry more weight than price per square foot. Our recommendation is to be sure to be able to view the entire picture including, recently sold comps, location, condition, match to your personal criteria etc.

Be aware of square footage but don't get lost in those numbers.....doing so can be counter productive.

Good luck
0 votes Thank Flag Link Wed Mar 25, 2009
You will need to do some home work to find 2 or 3 homes that sold with the same basic features,located in the same general area and within the last 3 to 6 months. If you find these sales then you can compare apples to apples for, location, age, square feet, condition, and other speacial features. That information when compared to the home you hope to buy, may provide some leverage to get the seller to reduce the price for you.
Web Reference: http://www.earlcannon.com
0 votes Thank Flag Link Wed Mar 25, 2009
The house I am speaking of is one that was built in the 50's and has not really been updated since. The bathrooms are vintage (green tub, toilet and sink with bright pink tile, and the entire house has linoleum tile floors. There was wall to wall carpeting placed over the tiles in the living, dining room many years ago, but the bedrooms are all linoleum tile floors. The kitchen is extremely needy with a washer, oven, sink, dryer then refridgerator in that order in an L shape with minimul counter space covered with vintage linoleum. I really love the house but the price is too high for me with all the work to update it. The perks are: a beautiful piece of property and 2 car garage. Looking for ways to be able to negotiate if square footage doesnt help me out.
0 votes Thank Flag Link Tue Mar 24, 2009
Of course, square footage matters. But I wouldn't say that price per square foot does. Sorry if that sounds a little convoluted. What really is important to consider is, just like my colleagues have mentioned, sold comps. Active comps only matter as leverage.

Facts are what you need to look at. If you want a free CMA or any help at all, send me a quick email at any time.

kevinv@premierreo.net
0 votes Thank Flag Link Tue Mar 24, 2009
I agree with most being said. May I add that in some cases the square footage is inaccurate. In same cases I have heard og sellers measuring their home room dimensions. How accurate can that be.Sod comparables.
0 votes Thank Flag Link Mon Mar 23, 2009
Hi Linda,

Agree with most of what's said here already. No - not usually. Sold Comps in a neighborhood have a lot more to do with it - and condition for sure - as well as upgrades for that home - and age of home - and taxes as well. Newer homes often have much higher taxes than existing homes in the same area.

In eastern PA watch out also for Earned Income and/or City Tax also. I modified my housing searches to avoid getting hit with another 1% in income tax in certain municipalities in eastern PA. This can amount to a lot of money every year. Personally, I'd rather use that for my mortgage where it provides more benefits.

But I also like to get the most house for my money - so all things being equal I'll want the larger house too, and sort my searches by sq footage.

What can be an inconvenience is that some listings show incorrect #s for these - especially for townhouses and condos. Often, the #s for "Building Square Footage" end up being used in the listing for "Internal Square footage". I don't think this is so much of an issue with true single family homes however. But then a lot of condos and townhomes are also listed incorrectly as single family.
0 votes Thank Flag Link Mon Mar 23, 2009
Location and square footage are what new construction base the price. Then factor the amentities.Most cases are measured against comparables,which include all of the above.
0 votes Thank Flag Link Mon Mar 23, 2009
Hello, Linda,

As a certified Residential Appraiser I will tell you that price per square foot is a weak negotiating tool. Appraisers will use this type of adjustment for valuation purposes, but you should understand how it evolves. The final price/sf results from dividing total square footage of the living space (above grade) into the sale price. The sale price is the result of negotiations based upon location, condition, room count, amenities, etc. If the comps are showing lower price/sf, maybe there are reasons for that which you should analyze with your buyer agent.

If you need additional help with this, you can contact me.

Carol Murray Cei
ReMax Millennium
215-643-9661
carolcei@remax.net
0 votes Thank Flag Link Mon Mar 23, 2009
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