Home Buying in Irvington>Question Details

Frez, Home Buyer in 07111

What does price/sqft mean?

Asked by Frez, 07111 Wed Apr 18, 2012

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Hello folks. I am writing from Canada so I am not sure if the sq. ft. price is calculated the same there. We have been in the residential custom home market for 28 years. When the sq. ft. price first became very popular was in the days of building what we fondly referred to as a "BC Box" A basic rectangle with either two or three bedrooms ups, one bathroom up and family room and secondary bedrooms and bathroom down. A split entry. Very basic. The consumer didn't have the huge variety of choices for finish etc. that we do now so really it was pretty realistic. Now... not so much. Home come in many shapes, size, variables in roof design affecting trusses, more stringent building code, and the list goes on. Personally in our company we dislike the use of the sq. ft. price, here is why. Each builder will consider in his or her sq. ft. price what they feel should be included, there is no industry standard. For some (like ourselves) include the driveways, sidewalks, excavation, bascially everything to get you from excavation to turn key into a newly built clean home. The definition for the homeowner is not always the same as the builder you speak to. It is VERY important when questioning someone regarding a sq. ft. price to find out what is included within that price. Clarity and transparency is huge when having someone build you a home. Make sure that you are not only using a sq. ft. price to choose a builder, be sure to use your senses when interviewing builders. Gut feeling as to how you feel you could work with this individual is a greater guide than the sq. ft. price is. If you feel the builder is being open and honest with you and will talk through the process with you, then you know your new Home will be handled the same way. You will be financially and emotionally "married" to that company for 5 months or so while you build, so be sure there is trust and a sense of assurance that you and your money are in good hands.
0 votes Thank Flag Link Tue Sep 23, 2014
PSF is Price per square foot. Its a formula used to compare the value of properties in a given area based on size. This is a rough valuation because there are a lot of variables that determine actual value and doing so based solely on the number of square feet to me is not very accurate.
0 votes Thank Flag Link Tue Apr 24, 2012
If you take the price of a home that has sold and divide by the square footage of the home you will get the price per square foot for that particular home. When this is repeated over the homes in a general area, you get the average price per square foot a person can expect to spend in that area. It is merely a benchmark, as some properties are more or less up to date than another.
Joanne Bernardini
Sales Associate
Certified Short Sale Agent
Keller Williams Realty
One Atlantic Ave.
Ocean City, NJ 08226
office- 609-398-5454
0 votes Thank Flag Link Tue Apr 24, 2012
Hello Frez,

Price Per Square Foot (PSF) is simply used as a preliminary index to determine approximate market value based on building size compared to like-kind benchmark properties. In your evaluation, keep in mind this data should only serve as small barometer as other more relevant factors that include cap rate, price per unit (for multi-dwelling assets), NOI (Net Operating Income), and ROI (Return on Investment) should strongly be considered as well.
0 votes Thank Flag Link Mon Apr 23, 2012
It's a quick way to compare the relative values of similar properties. You're basically ignoring any qualitative differences in materials and fixtures between properties and just looking at the price you're paying for each square foot of space.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Wed Apr 18, 2012
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