Best of Luck on your purchase.
It can be one of the tools to use, but can't be used alone. I would also looked at homes that failed to sell. I would also recommend using assessed value correlation to sales price. Finally, condition, features, and yard size must be taken into consideration. Hope this is helpful.
I would consider $/sq ft as one of the tools in your arsenal for pricing a home, but like a hammer it is not the only tool. You should be doing a % analysis of assessed value, features analysis, condition analysis, and overall neighborhood assessment. Once you have all these values you can determine what is a fair and equitable value for the home. Best.