Comparing the price per square foot of various homes lets you quickly and efficiently determine whether the home you're buying, selling or building is a good value. When the location and other amenities of several homes are similar, the property that has the lowest price per square foot is theoretically a better deal. For home sellers, comparing the average selling price per square foot of similar homes lets you set an asking price within the acceptable market range.
Examine the home's listing if you're the buyer. The multiple listing service or the brochure should spell out both the seller's asking price and the property's square footage.
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For homes without a listed square footage and for previously sold homes, telephone the county tax assessors' office. Ask how you can access the property's tax records. Tax records are public documents that specify the square footage of the home's living space. Many counties make such records available online.
Make a list of all the nonliving space in the home. Nonliving space includes enclosed porches and patios, attics, garages and detached structures such as guest houses that you have to leave the property to access. As a rule of thumb, a room that is not heated is nonliving space. These spaces are not taken into account when calculating the fair market value of a home.
Add together the square footage of all the nonliving spaces. Deduct the total from the home's overall square footage. The resulting figure is the home's living space square footage.
Insert the home's sale price and living space square footage into the following formula to figure out the home's price per square foot:
Price/square feet of living space=price per square foot.
So, a 1,850 square-foot home listed at $350,000 has a price per square foot of 350,000/1,850=$198.19. At the time of publication, the median price-per-square foot of homes in the United States is $118, though large variations exist among states and neighborhoods.
Use the same formula to determine land value if you are buying a vacant lot. For example, a 10,000 square foot lot on the market for $200,000 costs $20 per square foot. A 20,000 square foot lot on the market for $350,000 costs $17.50 per square foot. All things being equal, the larger lot presents the better value.
If the listing doesn't give the square footage for the nonliving space, multiply the length of the room's area by its width. This gives the square footage. For complex room shapes, see How to Calculate the Square Feet of Odd Shapes.
Price per square foot is a useful apples-to-apples comparison tool, but it's only one of many ways to compare the value of homes. For example, if the average per-square-foot price of homes in a neighborhood is $100, you would expect a 2,500 square foot home to be listed for $250,000. However, those figures don't take into account the important features of the home such as top of the line appliances, granite countertops and open views, all of which can adjust the sale price.