I hope this article will answer some questions that I get asked a lot by buyers and sellers. The question is: "What is the average square footage price in this area?" Meaning mostly the immediate area they live in or want to buy or sell a home. My answer is: it really means nothing. I will explain why in this article. Where I live in Prescott, Az., in my immediate area, selling prices range at this time from $120.00 to $205.00 a square foot. We live in an upper medium price range $300,000 to about $600,000.
Let's Look At The Following Factors:
Lots Or Acreage:
Most of the time size is not that important. The things that are would be: usability, access ability, views, creeks, water frontage, privacy, mountain views, trees, etc. Others would be closeness to schools, shopping and medical, depending on your family wants and needs.
Add On Options, Upgrades:
In many markets, this could add on 30% or more in the same models or floor plans. Go to any open house in a new area and you will see this, as builders normally show their models including all options. It gives you, the buyer, many choices.
Kitchens And Bathrooms:
I keep these rooms separate, because the cost can vary many, many thousands. Granite counters, size, appliances and much more. It's easy to nearly double the cost, if you wish, from a standard, basic model to an upgraded one.
For years, appraisers have used age as a barometer, I look more at the condition, quality of construction, seasoned yard and the many positive amenities of a used home over a new home as they both have their advantages. When you speak of age, many older homes were built better.
Please go to a few open houses and you may see a large difference again, meaning thousands of dollars.
High traffic streets, air traffic noises, odors, closeness to schools, shopping, medical, the beaches, etc. can add many good things and many can reduce values, especially in pricing.
They can be good and bad. Barking dogs are about the worst, with car tear downs, messy yards, condition of their homes, falling fences, total disrepair of anything that is visible from your home , and odd colors are all some of the bad. All of these plus more can have negative effects on the sale price of your home.
Home Owners Associations And Amenities:
Many amenities are never used and some are. H.O.A.'s and amenities may be viewed as both good and bad. Some cause the prices to be higher, some lower; some association fees price many out of an area. Over regulation and fees have now become a major factor in many buyer's minds and it also can reflect on pricing and salability. Why buy in a Golf Community, when you are not a golfer. Some are a plus and some a minus on this. Enough said!
This could very well be one of the biggest unknown factors, i.e., ocean views, ocean frontage, lake views and frontage, mountain views, city light views, creeks, rivers, privacy, bordering state or federal land. Many of these can double or triple or more the cost of the building site. An example would be the top of a hill, great views or bottom none, at the ocean or one block away. A view of the lake or none, I could go on, but I know you have the idea!
One story, two story, split level, small rooms, obsolete, unusable floor plans, homes with basements and homes with none. A one story costs the most per square foot, a two story and split level cost less. Many times by 25 to 30% or more for the single level. Why? You have one roof, one foundation, one kitchen and baths on the one level. The balance of square footage on the second or third level is much cheaper. I can add on usually a fireplace also on the main level. You get an idea on the square footage cost and value difference for many reasons. That's how come I always say "All square footage is not created equal."
WOW! I guess you get the idea, so realtors, home buyers and sellers, if we have not seen the comparable, how can we fairly compare? We can't. Some appraisers use a cost approach. How can that work? During the housing recession, when the market fell up to 60%, did the cost of plumbing, materials, electric, roofing and labor fall up to 60% and now did it go up 60%? You know this answer---NO! This really doesn't work either. The real value of a property should be what a buyer will pay and a seller accepts.
If you read the 10 factors of pricing, you will see it is not easy arriving on an accurate price. It comes down to buyers' wants and needs and they are all different. The people who really put the final price on a home in most cases are the buyers. They have many choices plus the money and a seller has only one home. We have seen over the past 10 years that buyers push prices up or drive them down, mainly because of supply and demand, wants and needs, interest rates, jobs and general economy.
One Last Thing:
Yesterday a lady came to my office with a flyer for her home that is listed by Zillow. It was $275,000 and unsaleable. Zillow's zestimate said the worth was $174,000 and other internet sites were from $133,000 to $180,000. Who is right? What are we doing as an industry to get this right?
Thought for the day: You can't tell a book by its cover or a value of a home from the outside!
Thank you for reading this "Food for Thought" article! It's written to help everyone and gives you much to think about. Please, if you have any real estate questions about buying or selling, call me at 928 533-4455. The call is free!
Remember, "Experience Isn't Expensive, It's Priceless!"
Lee Amble, Realtor, Consultant
National Realty Of Prescott
Lee's Cell: 928 533-4455
Jan's Cell: 928 533-4488