Are you thinking of selling your home? If so, here’s how to create a real estate money-making machine that, well, doesn’t actually work.
What do I mean when I talk about creating a real estate money-making machine that doesn’t work? Let me explain:
I was speaking with a client the other day, and he was telling me that homes in a certain neighborhood were selling for X amount per square foot, which, in his mind, meant that the home was worth X amount per square foot.
Let’s say you have a home that’s worth $500,000 and has 1,000 square feet. That would mean the home was worth $500 per square foot. Some people make the mistake of assuming that you can price homes that way and use that as a basis to make claims about a particular home’s value, like in the example I gave above.
“When it’s time for you to price your home, don’t use the price-per-square-foot model.”
Allow me to take this to the extreme in order to illustrate why this doesn’t work:
Let’s say that you have a 1,000-square-foot home. If homes really are selling for $500 per square foot, then what you should do is just make that house as big as you can—the average cost of construction is around $250, so why not add, say, 3,000 square feet to the house? It would only cost you $750,000, but according to the price-per-square-foot model, you’d increase the value by $1,500,000. That would be a great real estate money-making machine—if that’s how it worked.
If that were how things worked, I would buy as many houses as I could, have contractors add onto them, and then make tons of money hand-over-fist. Unfortunately, that’s not how real estate works.
When it’s time for you to price your home, don’t use the price-per-square-foot model. Instead, use me to figure out your home’s value because that’s what I do. If you’re thinking of selling your home and need to know your home’s value, feel free to reach out to me. I look forward to speaking with you.