I met with potential clients last week. They told me they wanted to list their home for $600,000. According to the last MLS listing, their home is 2500 square feet. I reviewed the comparable sales in the neighborhood and found that all the homes that sold for close to $600,000 were closer to 3500 square feet. On a price per square foot basis, most homes sold at $171/square foot. A $600,000 list price would mean their home would be listed near $240/square foot.
Can we justify the higher price?
Sometimes homes have been remodeled or upgraded. Granite counter-tops, travertine or hardwood floors and walnut cabinets when your neighbors have tile, carpet and cheap wood cabinets can command a higher price/square foot. In the case of the home I visited, their finishes were comparable with the other homes in the neighborhood.
I suggested we hire an appraiser to measure their home. The appraiser is an objective third party who measures homes every day. Perhaps the agent who last listed their home made an error on the size of the home. If I have a measurement from a professional appraiser, I can use that measurement in the Park City MLS listing instead of the random number that was on the last listing.
If their home turns out larger than we thought, we can justify the higher listing price. If their home turns out to be smaller than their neighbors, then my clients will have to make a decision.
Smaller homes command a higher price per square foot because there are fixed costs for homes that do not change (the land and the labor to build the home). However, in this case, I think a $70/sq foot difference would be too aggressive.
Whether you are buying or selling a home, it’s a good idea to know the size, because there is a direct relationship between size and value.
Have you had an experience where a home was not the size you thought it was?