What is Your Price Per Square Foot?
One of today’s most often asked questions from a new home buyer is: “What is your price per square foot?”
Lenders, appraisers, and real estate agents all use the term “price per square foot” when evaluating home values and listing prices. But with a NEW home you cannot, in all fairness, compare homes by that criterion.
It’s like asking a car dealer “how much do you charge per pound for a new car?” There is no simple answer to that question and likewise there is no simple answer in comparing new homes.
There are numerous opportunities for a homebuyer today to be misled and often confused when trying to sort out the “price per square foot” dilemma. However, there are a number of categories where questions can be asked to help sort out the data being used to calculate the “per sq. ft.” costs.
Pricing Elements To Consider
For an accurate figure of the cost of just the structure, you must remove the cost of the land and all site improvements to the land. A lot that costs $50,000 equates to a lower price per sq. ft. when combined with the home than a lot that costs $90,000.
In this area, we do not include the space in garages, unfinished basements, porches, decks, and patios.
For example, a one story ranch has more basement and roof than a two story of the same size, therefore, costing more to build.
This is a really big item. You can have two identical homes sitting next to each other and the price per square foot will differ quite widely based on the materials used by the Builder.
A good example, Builder A uses vinyl flooring in the Kitchen/Dinette and Builder Bused hardwood flooring or ceramic tile. The wood and tile flooring cost more than the vinyl and hence the cost per sq. ft. will be higher.
Another case, Builder A uses a low end straight run of cabinets as a standard and Builder B uses custom cabinetry in several wood species including cherry with varying heights and depth creating an aesthetically superb look…
Some other product differences to consider – quality of windows, doors, plumbing fixtures, appliances, carpeting.
Design features such as sophisticated rooflines and grand two-story entryways cost more, but do not add to a home’s square footage, thus adding to the cost per square foot. Other features affecting cost include vaulted and cathedral ceilings versus flat, tub/shower versus a whirlpool tub set in a ceramic tile deck, and vinyl flooring versus ceramic tile.
A home warranty requires the home be built to specific construction standards and provides peace of mind. When comparing two identical homes, one with a structural 10-year warranty and one without a warranty, which would you purchase?
Labor costs vary with plumbers, electricians, heating contractors, carpenters, dry-wallers, flooring installers, and painters. In order to cut costs, a builder may hire the low-bid contractor, an approach that when repairs and resale are considered may end up costing you more. A builder has more quality control by building with their own employees and enjoying long-standing relationships with quality subcontractors.
As a buyer in today’s highly competitive new home marketplace, it is important to understand the often misleading and confusing “price per square foot” quandary.
Cost per square foot seems like a very fair way to compare prices and builders but with all of the variables the number itself can be used in a misleading way by an unscrupulous builder!
Contact A Housing Consultant
Please contact a housing consultant for pricing. There are many factors such as acquiring permits, site development, and optional features that affect the price of a new home. To provide you with the most accurate estimate, please contact your corresponding office/housing consultant.