Hi all. Price per square foot is helpful, but doesn’t account for the amount of land a house is also sitting on. So I was curious what other metrics can be used to compare a total property’s value with that of another property to get an idea of a ‘good deal’?
Look for other home sales that are close, comparable, closed, and recent. That’s basically what appraisers do. You can also google search ‘I’m a new realtor how do I do a comparative market analysis.’
Comparative prices. Price per sq ft doesn’t take in the most important factors in determining real estate prices. Location, Location and Location.
How does $/sf not reflect location, location, location? $/sf bakes in everything, including the lot size, location, crime, etc.
Incorrect. $/sf leaves out so much. Far more accurate and easier to quantify is using RFs and PKIs and KPIs.
If you are talking about commercial assets, then I agree $/sf doesn’t tell you the whole story. But for residential, $/sf is the best possible metric.
For residential a much better analysis is to do RA calculating KRIs and KPIs. $/sf is just a superficial analysis.
Cap rate. NOI. Cash on Cash return.
True. I suppose figuring out what other comparable properties are renting out for and dividing that by the listing price would account for all aspects of the property.
That’s called GRM, and will NOT help you determine the value of a home. Look up an actual appraisal report to see the different approaches to value.