Home Buying in 22304>Question Details

Firsttimer, Home Buyer in Alexandria, VA

Price per square foot

Asked by Firsttimer, Alexandria, VA Thu Apr 10, 2008

I paid more for my place than the average cost of price per foot is in my neighborhood. (My realtor didn't give me that information when I bought and I didn't know to ask). However, I have a really nice view and a balcony and most everything in my place was new when I bought... whereas a lot of the places that I saw when I was looking were in far worse shape.

Is this pretty common? To pay more than the average price per square foot for a higher quality place?

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Most purchase contracts are contingent on the home appraising at or above the sales price the seller and purchaser have agreed on. If the home doesn't appraise, then the contract can be renegotiated between the buyer and seller at a new price they can both agree on or, if they can't agree, either party has the option of voiding the contract.

To have a common denominator to start their appraisal with, most experienced appraisers start by looking at the per square foot price of recent closed sales to arrive at an estimated value for a home under contract. Then they add or subtract for amenities and features that the home under contract has or does not have in comparision to the more recent sales in a neighborhood. Those additions or subtractions can cover a wide range including larger or smaller size, decks, lot size, a view, a remodeled kitchen or baths, overall condition and other elements.

It's likely that your appraiser, who would have been hired by your lender, arrived at the value of your home through this or a similar formula and was able to add value for your view and the fact that your place was in significantly better shape than the other homes on the market. Based on the appraiser's conclusion of the value of your home, and the fact that the appraiser's evaluation, as a safeguard, would have been reviewed by your lender's underwriting department, you probably paid a fair price for your home. Enjoy it!
1 vote Thank Flag Link Tue Apr 22, 2008
Yes, the property features and condition have a lot to do with the asking price in any particular area.

When I work with a buyer, I usually run a CMA - Comparative Market Analysis - for any property they are thinking about writing an offer on. This is the same report I would run for the seller if they asked me to list their property. The buyer should be armed with the same information to level the playing field and make an informed decision.

Web Reference: http://AHomeInRichmond.com
1 vote Thank Flag Link Sat Apr 12, 2008
Sounds like you answered your own question, although i would ask for price per sqft ahead of buying.
1 vote Thank Flag Link Thu Apr 10, 2008
Price per square foot increases with the quality of the property and its location (ie closer to the Potomac = higher $/sf. Prices for condos in Alexandria City range from mid $100's to $600/sf., quite a range. Kitchen, bathroom and flooring upgrades are some examples which increase the price per square foot. This number is a tool in assisting with valuation, but the most important valuation comparison to make is with comparable sales. Generally, comparable sales need to occur in the past 6 months, but appraisers are using the past 30-90 days in the current market.
0 votes Thank Flag Link Tue Aug 18, 2009
There are many things that affect the price per square foot. You have mentioned a couple of them. Smaller homes in a neighborhood will typically bring a higher dollar per square foot than larger homes. You should definitely look at a CMA (comparative market analysis) of the last few months in the neighborhood. If your home is in as good a condition as you mentioned, plus it is one of the smaller homes in the neighborhood, it would be priced near the higher dollar/s/f found in the CMA, IF the value of the neighborhood is increasing. If the value trend for the neighborhood was going down, you would not want to buy anything that had the higher dollar/s/f. It is always a good idea to get a 2-3 year trend analysis for the neighborhood in addition to the CMA.
0 votes Thank Flag Link Tue Jul 14, 2009
Yes, especially if it has less sq. ft. than than some of the other properties.
0 votes Thank Flag Link Tue Jul 14, 2009
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