Price per square foot is a common mistake made by the typical Realtor when valuing residential Real Estate.
Too often Realtors rely on the most basic of equations to determine the sale price of an asset. This is largely a result of a lack of understanding with respect to the elements and adjustments inherent in a proper opinion of value. An accurate value will spare participants the anguish later when an Appraiser arrives at a value that varies greatly from all parties’ expectations.
An Appraiser is engaged by a client, typically a lending institution, for an opinion of value. That value is the basis for terms of the finance transaction. This is where the rubber meets the road, so to speak, and is very serious business at this juncture. In this reality the Realtor and Sellers wishes and hopes are just that. You can dispute it with evidential supporting data or negotiate an amicable compromise. Either way this is better dealt with earlier in the process.
Relying solely on the average price per square foot without regard to an exhaustive “deep dive” into the material facts that define each comparable is naïve. The result is most typically an overpricing of the asset unearthing numerous unnecessary complexities. More importantly it will end up financially penalizing or disadvantaging your Customer.