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Price Per Square Foot

In looking at my neighboorhood, the "Northgate" area in Fremont, CA I've noticed a strange trend based on the "Zestimates."  ALL of the homes that are UNDER 2000 square feet have a price per square foot of at least $350 (and some as high as $400 and up).  However, ALL of the homes that are OVER 2000 square feet are around $250 to $270 per square foot.  I wonder what the reason for the HUGE difference in price per square foot.

My house is 2,014 square feet and just barely falls into that larger category and the Zestimate seems to reflect this much lower price per square foot.
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August 14 2010 - Northgate
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That's typical because the price per sq foot does not take into account the value of land, or for that matter views, pools, lot size, condition, quality, etc. In a average area the larger the home, the smaller the square footage.

I just appraised a 600 sq ft (teardown) house for $600,000, thats $1000 per foot (because all of the value is in the land, nothing for the house)...down the street I appraised a CUSTOM 10,000 sq ft brand new home (same size lot) for $2,400,000, thats $240 per sq ft...So is the custom 10K house not as nice as the 600 sq ft teardown ? Of course not.

Valuing residential homes per the $$/sq ft method is NOT used by real estate professionals EXCEPT in areas where there typically is new construction and the value of land is zero or extremely low, ie desert properties. Anyone else who relies on this method usually is brand new in real estate...

Your home is worth what its worth - ignore the $$/sq ft number completely.


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August 14 2010
The price per square foot is a good starting point as long as you are evaluating properties in close proximity of the one you are interested in.  That is about all it is worth.  You then have to look at age of the property, square footage of the house, amenities of the properties and condition of the property compared to the one you are interested.  Realtors use the CMA (comparative market analysis process to assist both buyers and sellers.  It is a good tool for the business we are in.  It is not as exact as an appraisal by a licensed appraiser.  Two identical properties sitting side by side could value differently simply because of curb appeal.  The true value of any property is in the eyes of the beholder.  In other words, the buyer determines the value.  A closed contracted sale is the new value of the property. 
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August 15 2010
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In your area of Fremont, usually more than 50% of the property value is in the land.  (Your tax bill mailed each year from Alameda county will reflect the proportions).  Therefore, the square foot comparison is not particularly valuable because a 1000 square foot house and a 3000 square foot house on the same 1/5 acre of land will have the same land value, so if one calculates by square foot the 3000 square foot home will not be triple the value as the 1000 square foot home.

I did some browsing in the neighborhood, and don't see the precise cutoff at 2000 square feet that you are seeing.


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August 15 2010
 
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August 15 2010 | 3 answers
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