In 1995, I represented a seller who had, four years earlier, paid $180,000 for an 821 square foot home that he sold for $150,000. He had to bring to escrow a check for over $20,000 to close the transaction. That house, with no significant improvements, today sells for $400,000, approaching $500 per square foot. This is an example of the type of property that has the greatest potential for loss if the market gets soft.
Using price per square foot (ppsf) is a highly valuable, but underutilized, tool for clarifying reality. Analyzing ppsf before you buy could prevent you from someday writing, rather than receiving, a check at closing.Read More