Biggest House on the Block: How Price Per Square Foot Impacts Your Home Value
There are many ways to value a home. Some argue a home is only worth what someone is
willing to pay for it. Others look to an estimated algorithm provided by services like Zillow.
Knowing your price per square foot (PPSF) and how that impacts both listing price and time on
the market is an invaluable tool for homeowners.
To calculate your PPSF you simply divide the cost of the home by the number of heated or
cooled square feet to get the total. However, things like additions of a swimming pool, kitchen
and bathroom updates, upgrades such as high-end flooring and finishes can also add to the
overall value of a home.
Location also is a huge factor, as are many intrinsic qualities of a home. While the PPSF is just
a number, it’s one that should be scrutinized when determining how much your home is worth.
Furthermore, square footage and home value is something to seriously consider when it comes
time to resale as you will be competing with other nearby homes.
For most military families, when you are house hunting you are not only looking for a home for
yourself for the next two to four years but also you may be keeping in mind the eventual resale
of the home or ability to rent it out as an investment property. We have all heard the wisdom of
“ Don’t buy more house than you can afford ,” but how can this maxim also translate to “ Don’t buy
the biggest house on the block ?”
For starters, having the biggest home in the neighborhood has historically meant that the overall
value of your home will not increase at the same rate as surrounding homes. The appreciation
rate is slower for the largest home but improves most rapidly for the smallest or worst house on
the block. Any improvements you make may not pay off in a timely manner when it comes to the
value of the home.
As for a home appraisal, it may be difficult to find comparables on size with homes surrounding
yours. If your home doesn’t appraise for what you think it’s worth you may have a difficult time
recouping any equity or profit in your home and finding a buyer who can qualify if the appraisal
doesn’t meet the sales price.
Have proof of your home’s actual square footage verified by a trusted professional. Don’t simply
take a listing agent’s word for it. Make sure your tax records show an accurate number or
consider having a home square footage certification completed. Ensure that your home’s
appraisal takes into account all of the important variables for a home valuation.
By doing your due diligence to ensure an accurate accounting of your home’s square footage
and value, you can then take the necessary steps to purchase a home within a comparable
“median range” of square footage among your neighbors and nearby homes. When it comes
time to sell or relocate, you won’t have the worries of being the biggest house on the block. You
will ensure that your home has time to appreciate and sells quickly based on the right pricing
and timing of improvement.