Educating the Consumer



Price Per Square Foot

Buyer

One question I like to ask Buyers when we meet is how many homes have they purchased? At any point before the closing did the agent representing you ever discuss price per square foot? Daily, I find the answer to this question a resounding no! I often wonder why?

As the Broker/Owner of TEXdot Realtors, Inc. I have had the same experience. Trying to discuss price per square foot with an agent was impossible. If an agent is required to give you comparables (with price per square foot), why wouldn't an agent teach you about price per square foot when you are house hunting!

Before I opened my own brokerage, I wanted to know the real value of a home. The last conversation I had with a realtor went something like this.... "if you like the house you should offer close to 98% of the list price". I thought really? Why? What data would make me offer that much of a list price, especially when this house is vacant?

Even though back then the Information About Brokerage Services (read more) was around, our agent at the time, never said, that since I didn't have a buyers representation agreement with him, he worked for the seller, back in those days it was part of the contract. A little late to know the agent worked for the seller. Our agent had countless conversations, knew our reason for moving (relocation), etc.

Which still lead me to my original question, on every house I purchased and sold. How much is this house worth? Some agents hold certification with the National Association Brokers Price Opinion Professionals (NABPOP), many, many agents don't. This certification, is national; teaching all agents to use the same formulas and allowances (not dollars, but construction differences) to adjust comparables for pricing a house for sale or for purchase. All agents use the Comparative Market Analysis, but without having any adjustments on the comparables leaves Buyers and Sellers on the short end.

So let's discuss how we would know if a house is over-priced, the only way to tell if three different houses, all priced at $150,000 are over-priced or not is by the price per square foot. Let's say the houses have the following data:

· $150,000 list price; $50.00 price per square foot

· $150,000 list price; $60.00 price per square foot

· $150,000 list price; $70.00 price per square foot

Which is the better value, assuming all things are equal on these homes, the best value is the house with a price per square foot of $50.00. The comparative market analysis will also help you determine the value of the home. While house hunting, continue reviewing price per square feet.

Typically we see price per square foot vary by the age of homes. While veiwing homes on MLS listing site pay attention to year built, square footage of home, and list price.

Since the square footage of the home divided by the list price determines the price per square foot, we then can see if in fact we are getting more or less square footage at a better price.

Price per square foot becomes imperative in buying a home. Ask your real estate agent if this is part of their education. If not call TEXdot Realtors, Inc. because it is ours!

Seller

When meeting with a seller, the price per square foot is something TEXdot Realtors, Inc. discusses from the beginning. Why?

Well, many comparables and statistics need to be pulled. Our agents will bring information regarding your subdivision, key map, and area. The comparables in the subdivision, latest sales (6 months), with comparables adjusted. Then the key map area, narrowing the criteria on the comparables, square footage, year built and 6 months of sales. Finally, the comparables for your Area should be reviewed. Sales are not as important on this data as your price per square foot and list price. Where will you appear on the active listings? How aggressive do you appear in your pricing (based on price per square foot)? What are your competitors offering?

Your agent will also bring statistics based on subdivision, key map, and area. These statistics will be broken down based on quarterly sales, for the last two year. You will then be able to see the sold price per square foot quarterly, and compare last year to current year. You will be able to see if your subdivision is on the rise or decline. Your agent will complete statistical information for the key map and the area as well. Call TEXdot Realtors, Inc. today!

Unfortunately for sellers, TEXdot Realtors, Inc. has experienced the majority of agents do not hold the certification of NABPOP. Due to agents without certification, this leaves many, many sellers to lose money. Since the buyer's agent lacks knowledge the comparative market analysis may be given to a buyer without correct adjustments, this then leaves the buyers with the impression the house may be over priced. Allow TEXdot Realtors, Inc. to communicate with buyer's agents on your behalf. Don't miss the opportunity to earn the highest and best price on the sale of your home!

Even though comparables are pulled and discussed, the list price is recommended by TEXdot Realtors, Inc., but the seller has the final decision.