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The Most Deceptive Home Buyer Tool – Price Per Square Foot

The Most Deceptive Home Buyer Tool – Price Per Square Foot

Most home buyers have two questions.  The first is, how long has it been on the market? The second is what is the price per square foot?

Why do I think the price per square foot is sometimes deceptive? How can a mathematical division problem be deceptive? Isn’t it straight forward?

Most people are using price per square foot as a universal factor.  They seem to want all homes to fall within their bracket or they feel the price is out of line. Seems straight forward, right? Let’s look at this tool.

1. It is OK to start with price per square foot.  A starting point for analysis. Make sure you compare apples to apples. Use the apples in the same barrel – tract or neighborhood.

2. The smallest home in the tract will have the highest price per square foot.  Any neighborhood, which is a planned unit development or a single builder tract has a small variety of models. Some smaller, some medium and some large. You will find that the smaller homes have the highest price per square foot and the largest model has the lowest price per square foot relative to that neighborhood. Here is an example; in 2014 I sold a the smallest home in a tract in Laguna Niguel which also happened to be one of the smallest detached homes in the city. The property was nicely remodeled and brought $450 per square foot. Three months later I sold a five bedroom home with a three car garage in the same subdivision which was nicely remodeled at a price that worked out to $350 sq per square foot. $100 per sq foot difference. Which one was right?

3. The style of home will affect the price per square foot.  In general a one story home will bring a higher price per square foot than a two story home. A multilevel may have a different average price that both of the others.

4. The age of the home will affect the price per square foot. Generally newer homes will have a higher price per square foot than an older home.

5.  Lot size will affect the price per square foot.  Anyone who has been to a new home builder will testify that the larger lots, the cul-de-sac lots and the view lots usually have price premiums. These days it is not uncommon to see 10K to 75K premiums on the best lots.

6. Water view or Ocean view properties will have a huge affect on the price per square foot.  I have run my own unscientific calculations on properties in Orange County California, particularly Dana Point and Laguna Niguel and found about a 20% minimum premium for ocean view lots.

I am sure there are more factors to consider as well. Homes are not a commodity. They are certainly brick and mortar or sticks and stucco but each home is different and it is a subjective matter to the buyer. Don’t loose out on a home you really like because the price per square foot is out of your unrealistic bracket.

For expert buyer consultation in South Orange County CA, call the Ron Buck Group at 949-456-0505 or contact  me by email.



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