“I saw a home and asked the agent what she thought of the price. She told me homes were selling for $400 per square foot, so the list price was about right. Even I know you can’t figure out a home value that way. Why do agents use something that doesn’t work?”
Using “price per square foot” (PPSF) to try to determine home values is a common real estate error. I see agents and non-agents do it all the time.
Of course, non-agents (i.e. normal people!) have an excuse: they’re not expected to be real estate experts.
But why do so many real estate “pros” do it? Here’s my theory…
Accurately determining a home’s value is an acquired and complex skill. It took me years to get good at it. So it’s an appealing shortcut to just open a calculator app on a smart phone, punch in some numbers, and—PRESTO!—spit out a home value.
It requires little effort or skill. And there’s an added bonus: to the uninformed it can actually make the agent appear pretty brainy.