A visitor at a recent open house asked why the price-per-square foot of the home was so high. The home in question has a golf course view, is of newer construction and has many features including garages for 3 vehicles (one is climate controlled), located just minutes from one of Sun City Festival’s recreation centers and more. When I advised the visitor that price-per-square-foot is not an accurate measurement of value he asked “why not?”. Let’s set the record straight on home value.

There are 3 general ways to determine house value. We’ll examine the value of each for a home seller or shopper. 

1. Price per square foot
2. Income
3. Comparable Sales

First, price per square foot. This is a great way to determine value for builders. This measurement reveals what it would cost to replace the structure. It would take into consideration structural upgrades such as number of bathrooms, garage spaces, roofing material, etc. It does not tell us what it would cost to landscape the property nor does it tell us much about specific location. If you’re using price-per-square-foot as your valuation you’re not seeing the whole picture. For instance, this measurement does not tell you the neighbor might have 3 junk cars up on blocks in his driveway or  the home is on a high traffic street. Despite this measurement, which tends to be favored on web sites such as Zillow, Realtor or Redfin, it provides little real value to a home seller or buyer.

Our second method of value determination is Income. This is a great tool if you’re an investor wanting to buy a rental property. How much rental income can this home produce? If you’re buying a house for your home this measurement is worthless. This leads us to the last and most important consideration of value: Comparable Sales or “Comps”.

As a Sun City Festival realtor this is the method I use to determine value. What is it and how is it used?  I look for sales and listings throughout the community the past 3 months for an exact model. If there is nothing in that period I’ll reach back 6 months. Rarely would I consider sales from a full year ago unless the home has unusual characteristics. If there are no exact models to compare, I’ll include homes similar in size. Once these homes are isolated, I drill down on location and upgrades. How does each home’s location compare to the one we’re listing or buying? What features do these homes have that our home doesn’t or, vice versa? (Beware giving cosmetic features to much weight in your consideration.)

Finally, be aware of market trends. Are home prices increasing or decreasing? Is the number of listings in Sun City Festival increasing or decreasing? If you’ve looked into my background you know I’m an information junkie. Ask me about the real estate market and you’ll get data and facts not just opinion. Here’s what’s happening as this is written. The number of homes listed is decreasing. The median price paid for homes month over month is increasing. Sun City Festival is a sellers’ real estate market.