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# How to Calculate Price Per Square Foot

Jun 8th 2024
The formula to calculate price per square foot is price divided by size (in square feet). So for example, if you have a 2,000-square-foot house selling for \$300,000 you take the total price, then divide it by the square footage, which would give you \$150 per square foot. Keep in mind that the price per square foot is generally lower for larger houses, and higher for smaller homes.

The average price per square foot is \$125 in the US. Real estate sites will often calculate the price per square foot for you, but what if they don't? It's important to know how to calculate the price per square foot to know if you're getting a good value.

This article will dive into what price per square foot means, how it’s calculated, how to compare comparable listings, and how to find sales information for a particular area.

## hash-markCalculating Price Per Square Foot Examples

Here are a few examples of how to calculate the price per square foot.

• A 2,000-square foot home is listed for \$400,000. In this case, \$400,000 divided by 2,000 is \$200 per square foot.
• A 1,500-square foot home in the same neighborhood is also listed for \$400,000. The price per square foot is \$267 per square foot, more than the larger home.
• A 2,500-square foot house nearby is listed at \$450,000. In this case, the price per square foot is \$180, less than either of the other homes.

### What Per Square Foot Doesn’t Include

Price per square foot doesn’t include anything about the home’s layout or other features, such as how many bathrooms there are or whether or not the basement is finished. For example, basements generally aren’t included in square footage calculations. If the 1,500-square-foot home has a 500-square-foot finished basement and the 2,500-square-foot home has a simple concrete cellar, that will affect the overall value but not the price per square foot.

That said, the price per square foot can give you leverage when negotiating with a seller. You can show them listings for homes in the same neighborhood with a lower price and use that as a tool to talk them down. At worst, they’ll refuse to meet your price. At best, it can help you get a much better deal.

## hash-markFinding the Average Cost Per Square Foot in an Area

Suppose you’re dead set on a particular neighborhood or school district. In that case, it can be a good idea to figure out the average price per square foot for that area.

### Choosing a Sample Set of Houses

To do that, you’ll first need to choose a sample set of houses. Then, you calculate the price per square foot for each of them, add them together, and divide the total by the number of houses.

### Example Calculation

For example, in the last section, our house prices were \$200, \$267, and \$180 per square foot. 200 + 267 + 180 is 647. Divide that by three, and you get about \$216 per square foot. That’s your average for the neighborhood.

### Assessing Value Based on Averages

How does this help? Simply put, it gives you a rough measurement of whether or not you’re getting a good value. If you see a home in that neighborhood that only costs \$140 per square foot, you might want to look twice and see if there’s anything wrong with it. Conversely, if a home costs \$300 per square foot, it’s probably overpriced

## hash-markReal Estate Comps and Price Per Square Foot

To make the price per square foot work for you, you need to understand how to find real estate comps or “comparable listings.” These are homes that can be usefully compared with the listing you’re looking at.

### Finding Useful Comps

To find useful comps, you’ll want to find homes that sold within the last three to six months. They should also be nearby, definitely in the same school district, and ideally in the same neighborhood. Moreover, they should be roughly the same age. A 20-year-old house is fundamentally different from an 80-year-old house, for example.

### Ensuring Similar Size and Attributes

Comps should be of a similar size with similar square footage to the home you’re looking at. Remember, size has a significant impact on the cost per square foot. Finally, search for homes with similar attributes. For example, if you’re looking at a home with an in-ground pool, your comps should also have in-ground pools.

### Calculating Average Price Per Square Foot

Once you’ve found a few good comps, perform the calculations we talked about and determine the average price per square foot. This will give you a good idea of whether you’re getting a good deal and what your negotiating position is.

## hash-markFinding the Data for Calculating Price / Sq. Foot

To begin with, you could simply check some online sources. Unfortunately, not all of these sources are reliable. For example, many include houses that are still on the market, which can skew the numbers higher. Make sure you’re only looking at closed listings if you’re using an online source.

You can also check public records. This is the most reliable source, but property records are not always available online or easy to use. A local multiple listing service fills a similar role but may or may not be available in your area.

Regardless of your location, a real estate agent can be an excellent source. You’re going to want an agent to handle your purchase anyway, so why not connect with one right away? Ideally, this agent should be local. The better they know the area, the better insight they can give you into a home’s value.

## hash-markHow to Calculate Price Per Square Foot Bottom Line

Price per square foot helps determine if you're getting a good value by comparing it with the average price per square foot in a specific area. While this measure is useful, it doesn’t account for a home's layout, features, or age, which can significantly impact overall value. To get the most accurate picture, use comparable listings from the same neighborhood, recent sales data, and similar home attributes. By doing so, you can better negotiate with sellers and ensure you're making a sound investment.

When evaluating the value of a house, several factors are important. There’s curb appeal and, of course, location. It’s imperative that you know how to calculate the price per square foot and understand how it works so that you can effectively negotiate.

## hash-markPrice Per Square Foot Calculation FAQs

### 1. How do you calculate price per square foot for rent?

To calculate the price per square foot for a rental, take the monthly rent and divide it by the floor space. That will give you the monthly price per square foot. If you need the annual price, just multiply that by twelve. For example, if the rent is \$2,000 per month and you have a 500 square foot apartment, you're paying \$4 per square foot a month or \$48 per square foot annually.

### 2. How do you calculate price per square meter?

The formula to calculate the price per square meter is price divided by size (in square meters). So for example, if you have a 100-square-meter house selling for \$200,000 you take the total price, then divide it by the number f square meters, which would give you \$2,000 per square meter. Keep in mind that the price per square meter is generally much higher than the price per square foot as a square meter is equal to 10.7 square feet.