YOUR EBOOK TITLE THE NEW CMA: COMPETITIVE NOT COMPARATIVE
Property Price vs. Finished Square Feet (FSF); From 8/10/22 to 3/31/23 Scattergram Pricing For: English Ranch (Fort Collins)
Properties Closed
Fair Market Value
$770,000
$720,000
$670,000
$620,000
$570,000
1,500
2,000
2,500
3,000
3,500
4,000
Finished Square Feet
Looking at this graph your first instinct might be that this is just price per square foot . The very simple explanation why it is not price per square foot comes to a basic understanding of how the trendline is made. If you look at this trendline you can see that it is an average amalgamation of the price versus size of sold homes that fit in this area. A price per square footage line would be a very similar looking line, however, it would be a much greater slope meaning it would be less flat and more angled. The main reason for this is if you just do price per square feet at zero square feet you would have zero price, while the trendline on this graph does not have the same relation. If I were to go to zero on the Market Value Trendline the value we’d find would be the worth inherent of the lot itself. So how do we use this to inform ourselves? Well first we can see that the homes sold have correlation to the Market Value Trendline , meaning they are fairly in-line and not way off. Next, we would look at two groups of homes sales. 1) The Outliers: The homes that are far from the trendline. Why are they above or below the trendline so much? Do they have special upgrades? Were they built more recently or are they older? We need to know why these outliers are so far above or below to understand the major detractor or increasing detail. 2) The Similar Size Homes: The homes that are close to our square footage are most likely going to be our closest comparison, if other things like lot size and year built are true and they don’t fall into the outlier category. If they are not in common, then we may need to look at what pros and cons we have versus them. We need to look at and compare our home to these properties. If they are above the line a little and very much like our home, then we would expect ourselves to be above the line a little as well, and vice versa. If we are newer let’s say, and have more features than a similar sized home, then we can expect to be a little above the selling point of that property as our starting point.
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