Tuesday, January 29, 2019

The thing about using price per square foot

When looking at pricing of houses, many of us revert to the price per square foot to compare homes.  Sites and apps such as zillow and realtor.com prominently display the price per square foot, and it sure feels like an easy way to gauge pricing.

But here is the thing.  What square footage is being used in the calculation?  Our local RMLS requires we use all square footage, finished or unfinished.  Garages, even attached or tuck under, are not included.

Most likely, we've all seen a HUGE swing in the level of finish in basements and attics.  There are plenty of old houses with funky, slightly damp basements; best for storage, work shop and messy projects.  We've also seen lovely basements with nice stairways, egress windows, waterproofing has been done, concrete floors polished and so on.  Both these basements will show up as basement square footage.

If I'm comparing a home on a crawl space, only the living space shows in the square footage.  A house with the same above ground living space, on a funky basement, will show as much as twice the square footage, and a MUCH lower price per square foot.  Is there value to the basement?  Yes, some.  But that funky basement square footage is not worth anything near what the above ground living space is worth.

What if that house on the crawl space had a nice, attached garage; drive right in.  Laundry in the garage (instead of down those steep basement stairs), and an entry to the kitchen from the garage.  One might argue that garage space is worth more than the funky basement.  Oops.  The garage isn't included in the square footage calculation   The crawl space/garage house still looks smaller and has a higher price per square foot than the house with the funky basement.

Attics play out similarly, though in general, folks value above ground square footage higher than basement square footage.  Attics can have plenty of challenges; steep, narrow staircase, low or limited ceiling height, little or no insulation, limited outlets etc.  Many of these attics weren't meant for occupancy.  But over the years, someone started using it for storage, and then project space, and then a den or study, and then a bedroom.  These attics may not have the necessary clearance for fire safety, and the added outlets, or even bathrooms, probably weren't done with permits, and may not be to code.

So, yes, using price per square foot is an easy, handy tool.  More important though, is how the space feels to you.  How will you and your family use the space?  For some, that funky basement is perfect! Others won't ever use it, and would value that attached garage over the basement.

In any case, buyers should be careful about excluding houses from their search because of what looks like small square footage or a high price per square foot.  You might pass by the right house because of the "easy button".

If price per square foot is really important to you, your real estate agent may be able to eke out a more accurate way to evaluate homes with different basement, attic and garage configurations.  If you have more questions on this, do get in touch, I'd be glad to help.

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