Price per square foot is a concept in real estate which is easy to understand and just as easy to misuse. The formula is pretty simple: To determine price per square foot, you take a price, such as sale price of a home, and divide it by the square footage of the property.
Price per square foot is useful in looking at broad market comparisons, such as comparing one entire metro area to another, or looking at an area’s average change over time. It is not, however, terribly accurate in figuring out the value of your home.
Why? Well, price per square foot fails to take into account the most important factors when pricing a home.
First and foremost, it makes assumptions about the home’s amenities. We all know the quality of materials used in home…