What is the house worth to YOU? You can offer the seller anything you want, really! There are no rules as to how you come up with your offer price. The seller can then accept, reject or counteroffer you.
But in the end if you get a mortgage, the house must appraise for what you're willing to pay.
I will have to agree with the rest of the Advice here...you really can not make an offer based on a rule of thumb figure and here are some things I would say would play a factor in why you can not use a price per sq foot.
1) You need to know what the upgrades to the home have been
2) You need to know what the other homes have sold for in the area that are like this home and did they have upgrades/updates.
3) What features does the home have?
4) Would it work out for the home you are selling to do the sq foot price guide?
5) What community is the home located in?
6) What are the benefits of the location
7) What is the Lot size
8) What are the neighbors like....seriously..cuz if they do not take care of their home....then the value of the one next door will be lowered.
I guess you never know...but I really doubt that this kind of method would work due to some homes being dumps and some homes being in excellent condition etc.
Now consider that single family homes will have many many more variations than condo units in the same building and you begin to understand that the simple sq ft price in a zip code is very limited in establishing fair market value.
It can't and will never work that way. There's a lot to consider in finding out how much your home MAY be worth.
Terrence Charest, e-Pro
Get in touch with a professional if you need help here.
fyi - the tax appraiser's valuation isn't a good indicator of market value in most areas either. In Gainesville FL it is usually tens of thousands of dollars too low.
I really like the square foot method of pricing a property. It is best used when you are determining the price to offer for a Condo. Even then, it works best when you are comparing similar condos such as condos in the same building. Condo prices per square foot really is a case of comparing aples to apples so to speak.
I also like to use price per square foot in zipcode to determine what the average price per square foot is but again, only with condos. So in Queen Village or Old City, for example, there are plenty of condos and looking at the average high and low is interesting and informative.
You can break it down by dividing up the current condo sales into a few categories such as 1) new construction condos w/ tax abatements, 2) older condo's with higer condo fees but with a door person or concierge service, 3) highrise condos 4) smaller condo conversions, and so on.
Here are a few littlle rules of thumb:
1) The smaller the condo unit's square footage, the higher price per sq foot you pay.
2) The higher up you are in a condo building the higher the price per sq foot can be as well (not to mention a corner or penthouse unit).
3) Try to compare "like" condos such as my example above using just new construction price per sq foot.
I hope this info helps.