If your New Orleans real estate agent is pricing your single-family or multi-family home (not a condo!) 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 don’t use it
Yep. You read that right. Appraisers do not value your home based on price per square foot. The only time this will come into play for them is when you have numerous homes that are exactly the same. (Still, other items are factored in) Think of cookie-cutter neighborhoods where only 4 different homes were built – this is when PPSF would be more useful.
Condos are another great example. Since most condo buildings have multiple units of the same size and footprint, PPSF is a great time to use that in determining your condo’s value. But, keep in mind, that it still isn’t the only thing to consider.
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.
What factors do appraisers look at when determining the value of my home?
- Lot Size
- Beds/Baths and floor plan
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. 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 for many cases. (And that’s if the square footage is correct!)
If square footage amount is important to you: then make sure you and your agent measure the house.
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.
Ready to talk more about real estate? Text us to set up a meeting!