Home Buying in 49505>Question Details

zelfinix, Home Buyer in Grand Rapids, MI

what determines the cost per square foot? why does it vary from house to house on the same street?

Asked by zelfinix, Grand Rapids, MI Sun Jun 2, 2013

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Larry has nailed it again! I really, really dislike price per square foot as a metric, but it is extremely popular in my market. It can be really misleading. For example, take a small home, put in a Viking stove and a Subzero fridge and you've just driven the price/sq ft through the roof, both in terms of sales figures and renovation figures. Or, consider a home on a large piece of land. You're paying a lot of money for the ground under the house, so if there's a lot of it, the price will go up significantly, which will drive up the price per square foot, when the value really had nothing to do with the shack that was sitting on the land. I'd love to see that metric fade away into oblivion!
1 vote Thank Flag Link Mon Jun 3, 2013
The only reason agents use it is that it is easy to calculate, I can do it in my head. But, customers have been told it means something - it is misleading.
Flag Tue Mar 3, 2015
The cost per square foot is simply the sales (or asking price) divided by the number of square feet listed. Focusing on Price per Square foot is ridiculous, to begin with many agents have no real idea how to measure an house and won't spend the money to have it accurately measured by an appraiser or other third party so the listed square footage may or may not be accurate.

Secondly price per square foot doesn't take into account the finish quality of a home. In a single neighborhood, one house could have custom hardwood flooring, granite counter tops, extra bathrooms finished in high end tile, a new roof, and hew heating and air conditioning equipment while another may have none of these things and still be the same size. Then there's lot size and desirability.
Even in a neighborhood not all lots are the exact same size and some are landscaped while others aren't some may be flt, others not, The truth is no two homes are exactly the same and buyers spend way too much time focusing on price per square foot. Price per square foot is a down and dirty guide that establishes the high and low ranges in an area. True experienced professional Realtors can and should then do analysis for their clients to help them understand the true market value of a property which is why Trulia's "Estimate of Value" and Zillows "Zestimate" are not only worthless but aggravating to true real estate professionals. Neither site has ever seen a single property listed on their sites and base their numbers on tax records and price per square foot information. You should focus on finding yourself a good buyer broker who can assist you in valuing properties you're interested in. I've attached a link below on what to look for in a Realtor.
1 vote Thank Flag Link Mon Jun 3, 2013
Cost per square foot is ultimately determined by the market, that is, what someone is willing to pay for your home. The style (two story versus ranch), overall condition, quality of finishings, lot size, and location are all factors and effect the end price and therefore, the cost per square foot.

Five different buyers could value the same home differently. It just depends which one buys it which then determines it's market value. Homes do not have an exact market value, rather, a range of value.

Hope that helps.
1 vote Thank Flag Link Sun Jun 2, 2013
Thats a great question. It can very by the upgrades in the house, or if the house has a garage.
Maybe the home is even overpriced.
0 votes Thank Flag Link Thu Jun 13, 2013
Price/Sq Ft = cost per square foot
House values are not assessed by cost per foot.
0 votes Thank Flag Link Wed Jun 5, 2013
What people are willing to pay for it. First the quality of the area; amenities, potentiality, proximity to. In the mind of the buyer each home is a different castle. Bottom line: Love is in the eye of the beholder; although you agents can insinuate love with a good script based on true knowledge and service. Footage pricing is more suitable for commercial business; to an extend also.
0 votes Thank Flag Link Wed Jun 5, 2013
Square footage works much better on the commercial side as it is used as a "yard stick" for pricing... But the residential side is a totally different market and much more personal...
One home may be much preferred compared to another because of options, the way it sits on a lot, drainage, view, etc....
However, It is whatever the market will allow, But people who buy houses want to make them their homes and you can see huge differences in sq ft.
0 votes Thank Flag Link Mon Jun 3, 2013
Unless you are building a new home or buying a condo in a development, I wouldn't put to much value in "cost per square foot".

Personally, I have a two story home which gives me a lot more square footage over my neighbors ranch home. So my "cost per square foot" is going to be a lot less.

Jason Lash
The Lash Group
Prudential Preferred Realtors
Office: (616) 447-7045
0 votes Thank Flag Link Mon Jun 3, 2013
Cost per square ft is determined by dividing the purchase price by the number of sq ft. A 1200 sq ft home that sells for $120,000 is a sale price of $100 per sq ft. This only uses sq ft of the home and does not take into consideration the lot size, condition of home, or other features of a property. All of these things affect the price of a home and therefore the price per sq ft.. Hope that clears things up for you.
0 votes Thank Flag Link Sun Jun 2, 2013
Cost per square foot is determined by the price of the home divided by the number of square feet in the property. It is not a statistic for any specific area, but rather a tool to compare homes to each other.
Web Reference: http://www.BrekSchutten.com
0 votes Thank Flag Link Sun Jun 2, 2013
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