Profile picture for rjbroy08

Huge difference in price per sq ft in neighboring homes

Hello! We are in escrow for a home in Southern California for $720,000 and the home is listed as $569 per sq ft. We received back the appraisal report and all of the comps are listed as between $480-$505 per sq ft. We are VERY concerned that we may be overpaying for this house by quite a bit. It is in a very prestigious area in Pasadena and is the "cheapest" home in that area, but that's because it is smaller than most- only 1264 sq ft, compared to the average of around 1400-1500 sq ft. Should we be concerned? It has been remodeled and is in pretty good condition. Please advise.
  • July 12 2014 - North East
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Answers (2)

Profile picture for wetdawgs
Price per square foot is the worst way to compare home prices.  Houses are sold as intact units, not per square foot.  

All else being equal, $/sq foot is higher for smaller homes than larger homes.
One story homes are higher than two story homes.
Condition/remodeling can increase the number.
Amenities such as pools, views and dozens of others can increase the number.

Your appraiser would be doing you a disservice if that was the only number he or she used to compare houses.
  • July 12 2014
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The smaller the house the higher the $$/sq ft is, and vice versa.

The $$/sq ft methodology does NOT take into consideration LAND value, views, pools, condition, quality, school district, bedroom count, style, age - nothing. For ANY 'good' area one should never take into consideration $$/sq ft, its like judging beer by its color and judging a school teacher by their age.

The $$/sq ft method ONLY applies to areas where the land value is next to nothing ie Lake Los Angeles and where the homes are ALL the same EXCEPT for the sq ft, period.

Here is a lovely home at over $5000/sq ft... why ? 99% of the value of the property is in the land...

  • July 12 2014
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