Forget Price Per Square Foot
Many use a home’s price per square foot to establish its value. It has become very common to include the price per square foot value in a listing. Unfortunately, home shoppers tend to use the square foot price as a primary factor even in considering taking a tour of the home.
While often used, price per square foot doesn’t mean it’s the most accurate way to establish a home’s value and compare it with other houses. That’s because every home is unique. It only uses one metric, size. There are many other variables that will affect a home’s value.
Style, construction materials, various amenities, and, of course, location, location, location all play a significant role in the home’s value. All of these areas will have a significant bearing on the bottom line and none have anything to do with size!
Most recognize the value of completely refurbished kitchens and baths. The cost per square foot rarely takes renovations into account. Some renovations will have a greater impact on the final price than others. But that goes back to materials, as an example. Comparatively, two similarly sized homes, one with and one without that kitchen renovation, must command different prices.
One of the best ways to calculate a home’s value is using the comparison method. Most real estate professionals use this to provide more accurate pricing for a home they are about to list for sale.
Evaluating similar homes, or comps, in the area will provide an excellent perspective for a home’s most accurate value. Use metrics like style, location, size, and finishes to best create a snapshot of values in your market and neighborhood.
Look at the number of bedrooms and bathrooms, kitchen and dining room, family room, patio or porches, and even the garage. Naturally, any upgrades, finishes, quiet street versus busy street, plus any amenities like pools, water frontage, etc. will help provide the particulars of a very sound evaluation.
The comp research can be done yourself by exploring current and or recent listings. In addition, time spent reviewing public records can be a formidable task but provide a treasure trove of comparable information. As this all stacks up into your “to do” list, oftentimes, simply hiring a real estate professional can be your best and least time consuming solution!
Professional appraisals can also be another way to calculate your home’s value. A qualified appraiser may be able to provide a slightly less biased approach to establishing home value.
Appraisers with a professional designation from respected associations such as the American Society of Appraisers (ASA) have been thoroughly tested and certified to have the necessary qualifications for the task.
In addition to the comp evaluation, an appraiser may also use a cost approach. They determine a replacement value or a value to reproduce improvements or renovations that a home has undergone. A thorough appraiser will assemble all of this information along with the value of the property to provide a highly accurate picture of the home’s value.
Depending on your intent, whether the house is to be sold or evaluated for a mortgage, an intelligent home owner can delve into this for themselves. This can help provide you with a clear picture of your home’s value. Hiring a pro can help you take it to the next level.
