Using cost per square foot to compare homes can be a mistake.
One question that is often asked is whether you should use the cost per square foot of a structure when comparing homes. Most buyers, sellers, and agents incorrectly use price per square foot when calculating the property's value. The reality is that any time the majority of a property's value is in the land, which frequently happens in higher-end neighborhoods and older homes, you should not use the cost per square foot for the structure.
For example, if you had a tiny 1000-square-foot home on a large lot, the price per square foot would be extremely high. The only two areas where we recommend using cost per square foot in residential real estate are when comparing condominiums or brand-new construction homes. The reason for using cost per square foot for condos is that there is no land to worry about, so you are comparing apples to apples.
New construction cost per square foot is also beneficial because you are comparing like kinds, assuming the lots and locations are similar. New construction cost per square foot on the west side can range from $1,000 to $1,500 depending on the lot size, location, and whether it's a corner lot or has a view.
If you need more help with calculating a property’s value or anything about real estate, call or email me. I’m always happy to help.
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