We don’t price houses based on price per square foot. This seems like a hot take sometimes, but we have our reasons!
We also believe that if your New Orleans real estate agent is pricing your single-family or multi-family home based on price per square foot (PPSF), it’s time to find a new agent.
There are a couple of reasons that great real estate agents don’t use this method:
Appraisers, for the most part, don’t use it
Yep. You read that right. We have chatted with many appraisers who tell us this is definitely NOT how they determine the home’s value.
We love this blog from an appraiser that breaks it down even more: Price Per Square Foot is Not the Holy Grail of Property Value
It doesn’t tell the whole story
Even if you have the same exact home as your neighbor and the same amenities, PPSF doesn’t take into account other differences. Lot size, view, parking, beds/baths, and condition all still have to come into play.
This is why PPSQ is used more commonly in newly constructed subdivisions and new condo buildings. And even then, there are extenuating circumstances that would change this! Is the neighboring lot larger than yours? Does your condo have a city skyline view while your neighbor overlooks a parking garage? This matters and would change the value for many people.
What factors do appraisers look at when determining the value of my home?
- Location
- Property Type
- Lot Size
- Condition
- Style
- View
- Age
- Quality
- Amenities
- Beds/Baths and floor plan
- Parking
- Zoning
It’s all about what lies below the surface
If your neighbor’s upgraded house (new roof, updated kitchen, etc) sold for $200/square foot, why would the other house that still has 1960’s shag carpet and a 30-year-old roof be worth the same amount? The answer is, it’s not.
Let’s use that same $200/square foot example. If your house is larger than your neighbor’s by 100 square feet, you aren’t getting an additional $20k in value. This slight square footage difference will be very minimal.
If your agent only uses this method, then you would be overpaying in many cases. (And that’s if the square footage is correct!)
Our Final Thoughts on PPSQ
To avoid overpricing or underpricing your home, make sure you and your New Orleans real estate agent talk about all your updates and look closely at what else has sold nearby. That’s how you determine real value – not some arbitrary number that fluctuates constantly!
Pricing your home, or making an offer on a home, based solely on price per square foot is not a great idea. Smaller houses tend to have higher ones, and larger ones tend to have a lower PPSF. We know it’s hard – but shake this antiquated way of thinking and just know that real estate pricing is not an exact science!
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