049. what does price per square foot mean?

I discuss the importance of looking at the price per square foot in your neighborhood to get a good idea of market value, especially when your considering buying or selling a home.

Hello and welcome everybody to another episode of the Reside Daily Bite, I’m your host, David Doucette. Today, I’m happy to bring out the board – the board is back! It is Tuesday, so here in LA area, we do – our brokers- open on Tuesdays and I want to talk briefly about the price per square foot.

And what is it? It’s the asking price of a listing price divided by the size or the square footage (gives you the price per square foot). Wherever you are, not just in L.A., you should really be looking at the price per square foot. Some agents are very good at this, some agents are not.

I want to give you a couple of examples. I went and saw five homes today or five I’m going to tell you about (I saw more than that), all in the same general neighborhood. This one at $302/sq ft is priced a little low and the price point, under about 750 thousand is where I was looking today. Another one, we had $438/sq ft, $411/sq ft and $433/sq ft. This is actually about the range of homes in the neighborhood that I was looking at for a 2-bedroom, 1- or 2-bath home.

So, the reason I wanted to record this, is because, I went and saw a house that was not within this range, nor $500, but $695 per square foot. Now, that’s not to say there are no homes in certain areas or in the neighborhood of L.A. that might have that price or that asking price. The majority don’t. If you want to sell your home (2-bedroom, 1-2 bath), generally, you’re going to be in this price range. But the $695? It’s the last home I saw (already I know it may be overpriced), so, I’m expecting a completely done kitchen, a completely done, modernized interior, still, it is overpriced to $695 (even if that was the case!). The kitchen needed to be redone – it was a nice house, don’t get me wrong – but this $695… was overpriced. It should have been in this range or maybe around $500/ square foot.

But the point of this is, for you, the buyer, if you’re working with your agent, make sure you are discussing price per square foot. And what’s funny is the agent told me as I was leaving, “We have priced this aggressively” – those were his words. I bit my tongue and walked out. I certainly didn’t want to get into it; it is clearly overpriced. So again, know your market; know the price per square foot where you’re looking because this bothers me when I see listings like this.

I’m going to do a quick stat – hopefully the tape’s not going to run out. If you remember the stats we did yesterday, we had 124 listings expire in the last six months. We had 20 new listings come on last week. So let’s say, that’s 80 listings a month. Then, it would be 480 listings over the past six months; 124 of those have expired – that’s ¼ of the listings. So, ¼ of the homes you’d be seeing out there might be overpriced. But…that ($695) is overpriced!

My name is David Doucette, feedback 1-800-476-5579. Thank you so much for checking out The Reside Daily Bite.

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