Why Price-Per-Square-Foot Is a Shaky Data Point

Basing your offer price largely on square footage is not something I recommend doing. Though price-per-square foot is one of the most frequently referenced data points when it comes to San Francisco real estate, it’s a notoriously unreliable metric.

We live in a city that’s by no means cookie cutter. There’s no standardized square footage source. Sellers and listing agents quote square footage from past appraisals, tax records, and floor plan measurers, all of which can be very different.

For example, it’s no secret that tax records can be wildly inaccurate and outdated. Assessor-Recorder Carmen Chu visited our sales meeting at Zephyr in the past and talked about how antiquated the city’s computer systems are. Throw in the fact that our tax records go back to the early 1900s, with some having disappeared after the 1906 earthquake. Even if sellers make an honest effort to update their own tax record through city channels—for example, if they’ve added a legal bedroom and bath—the square footage they’re adding isn’t based on one standard source.

Equally important is the fact that San Francisco’s housing inventory varies. For example, there are houses with unwarranted units that have been completed without permits and not typically factored in to the overall square footage count. We also have TICs that don’t often have their individual size quoted in tax records because the latter only shows total square feet for the entire building.

Past appraisals can provide accurate square footage counts, but I’ve seen cases where there are two or three appraisals on hand that have all had different numbers. And as you might expect, sellers and agents typically reference the highest number. As one agent recently commented to me, “The square footage sometimes grows over time.” She mentioned one property in particular that had changed hands three times over a ten-year period, and each time, the square footage increased in the MLS.

I’ve heard anecdotes recently from my colleagues about buyers who got into contract on properties and ended up making a fuss when their appraisals resulted in significantly less square footage than what the disclosures suggested. Buyers need to prepare themselves for this possibility, especially when they’re writing offers with no appraisal contingencies.

So if you’re comparing values by price-per-square-foot, do so with a grain of salt.

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Get in touch:

Eileen Bermingham

Corcoran Global Living

415.823.4656

eileen@insidesfre.com

DRE# 01352627

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