This article originally was posted by the Greenville Journal, and we are sharing with their permission (and because we love it so much)
Price-per-square-foot is but one important aspect of analyzing a home’s value, says Joan Herlong of Herlong Sotheby’s International Realty.
“But price-per-square-foot is not the be-all, end-all,” she warns.
Too often, a seller will consult an online service to see what a neighbor sold their home for and use that as the basis of their target price.
“Price-per-square-foot is not a fungible factor in the pricing process,” Herlong says.
Instead, what Herlong often tells sellers is this: “I’m willing to pay $200 for an ounce of Chanel No. 5 in a beautiful cut-crystal bottle that looks pretty on my dresser, makes me smell nice and that makes people think I’m wealthy enough to afford it. Whether full or empty, a tiny bottle of Chanel No. 5 is a big status symbol.”
But while she’ll pay $200 for an ounce of Chanel No. 5 in that cut-crystal bottle, Herlong says no one would be willing to pay $200 an ounce for a 5-gallon jug of it.
“So, when someone tries to cut-and-paste the price-per-square-foot for the petite, perfect home down the block into their giant fixer-upper, the numbers don’t compute,” she says. “They’re essentially pouring their Chanel No. 5 into a big plastic jug and trying to make the numbers work.”
In fact, Herlong routinely confers with appraisers who tell her price-per-square-foot has become almost meaningless.
“Buyers and sellers — mostly sellers — have devalued the term through over-usage,” she says. “Again, it is one small facet of a home’s value. Hence the Chanel No. 5 metaphor.”
