The Part of a Real Estate Listing You’re Not Looking at But Should
When you’re grocery shopping, do you ever zero in on the cost per ounce of, say, the barbecue sauce you’re putting in your cart? Or how about the price per unit of the granola bars that you’re comparing? It’s a little trick that can help you comparison shop, and a similar strategy can be applied in the real estate market.
As you’re looking to buy a home, one of the factors you can use to evaluate properties is the listing’s “price per square foot,” real estate experts say. This framework won’t give you an apples-to-apples (or bungalow-to-bungalow) comparison. Rather, it can help inspire some smart questions as you’re delving into the homebuying market.
“Looking at price per square foot instead of just asking price can give buyers significant insight — but it’s rarely done,” says Constantine Valhouli, director of research for NeighborhoodX, a real estate research and analytics firm. “It’s a way for the average buyer to use easily available data to compare different listings.”
For example, Valhouli says, if one property has a higher price per square foot than another, what’s the reason for this: Is it in a better location, or does it have nicer amenities? Conversely, is the property with a lower price per square foot really a bargain, Valhouli asks, or is there deferred maintenance (upcoming assessments or an expiring ground lease, for example) or inherent qualities (it’s facing a busy street) that put downward pressure on the price?
But factoring in this kind of pricing isn’t as simple as it seems. Measuring square footage is actually a tricky science, Valhouli says, and to convolute things, it can differ by cities. For instance, in New York City, measuring square footage can be different for condos and co-ops. The ceiling height in attic-level apartments can affect what the legal square footage is. The same goes for lofts under eight feet tall, he says. “And outdoor space doesn’t always add the same value, even for the same amount of space (a large rectangular balcony adds more value than a thin ribbon of balcony),” he says.
Another thing to consider when touring homes and looking at listings? All square footage isn’t created equal, says Khari Washington, broker and owner of 1st United Realty & Mortgage.
For instance, Washington says, a one-story home with the same square footage as a two-story home will likely have more “usable space” because the stairs — and the area around them — may not be usable. (When’s the last time you hung out at the stair’s landing?) When you’re house hunting, Washington recommends making comparisons of the square footage in the rooms that matter most to you and that you’ll likely spend the most time in.
One more thing: Before you close, it’s important to know the precise square footage of the property. An appraiser can verify the square footage, says Christina Mendez, a real estate agent in southern California with Kaleo Real Estate Company. “Buyers should not rely on representations from others, such as the County Assessor, permit agency, prior lenders, or even the seller,” she says.
Here’s what else first-time buyers should know about square footage.