The Price Per Square Foot Myth: We have a client with a 2,600 square foot house listed for $1.1 Million. It has been listed pretty much forever and is not selling. The owner insists it is worth “$425 Per Square Foot” because “all the other houses in the area are selling for that or more”.
The problem is that “all the other houses” are ranch houses on flat, 1/3 acre lots in a family-oriented neighborhood; the subject property is a functionally obsolete, two-story nightmare, built into a hillside with a zero effective lot-size.
We bring this up because so many of our clients rely too heavily on “Price per Square Foot” with out taking into account Effective Lot Size, Design and Appeal, and Functional Utility of both lots and structures. And this creates value and appraisal issues time and again. Price for Square Foot should only be employed as a rough gage of value.
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