I went to see a nice lady the other day about selling her house. I did a walkthrough, taking notes. I looked at the pool and the yard. Then we sat down at the kitchen table to chat.
She immediately got out her calculator and pulled up Zillow on her iPad. She was armed and ready.I began explaining the selling process and all that we would do to market her home and watched her impatience grow. She wanted to talk about dollars per square foot. So, I said, “Why don’t we talk about price?”, and she lit up like a Christmas tree.
We looked at all the other homes on the market and what had sold in the last six months. She tapped at her calculator and absorbed it all.
As we discussed the different homes, I offered my input and assessment about adjusting the figures for a number of conditions and she said, “Wait! Are you telling me not all the dollars per square foot are the same?”.
I told her, “Yes.”, because while all dollars are created equal, not all square feet are the same.
She seemed disappointed, kind of thought about that for a minute, and then asked me to explain.
A square foot of a new house is worth more than a square foot of an older house. A square foot in Paradise Valley is more expensive than a square foot in Phoenix, and so on. As I explained, I realized how complex the adjustments are and how open to interpretation they become.
Appraisers hate dollars per square foot calculations. In fact, if you want to really set an appraiser spinning like a dervish, just try to simplify their process by reducing it all to dollars per square foot. You see, appraisers take comparable houses and make dollar adjustments for each difference, like the subject has a pool and the comparable doesn’t, so that’s maybe a $20,000 adjustment or may be $40,000 if it’s newer or bigger or may be only $10,000 if it’s old and needs replastering. It’s all done according to appraiser guidelines and then they try to figure which house is most comparable. Then they do a little voodoo and come up with a value. And they wrinkle their nose at Realtors, who have to work in the trenches every day dealing with what a buyer is willing to pay and a seller is willing to take. But I’ve gotten off track.
So here are the differences: a second-floor square foot is only worth about three-fourths what the ground level is worth, a basement is worth about half, depending on how finished it is. We’ve covered age and location. Original finishes versus remodeled can really swing the numbers and then you must ask the question, “Was the remodeling done well or on the cheap?”, because the seller was flipping the house for a profit.
You see, not all dollars per square foot are created equal, and then you must get into: Market conditions, Is the inventory up or down, Is this price range affected by interest rates? The list goes on. I’m exhausted just writing this and yet, I go out every day and make all these adjustments in my head. Maybe the voodoo comment was a little unkind since it probably describes me as a Realtor also.
So, what did our lady do? She said she would think about it and she had a couple other agents to interview. She called three days later to say she had picked me. I don’t know why after bursting her bubble, but I appreciated the opportunity. We got the house sold for a new dollars per square foot high and she is in her new house. I just love this business, voodoo and all.
– Joseph Callaway