Spring is off to a wild start, and buyers are out in droves, especially in the under $1.5 million market segment. I know buyers are in for trouble finding a home when the first thing they ask after saying hello is: “How many square feet is this house?” If you are one of these buyers, you will be in for shocking news to face on several levels.
The first thing you need to keep in mind is that when you look at a listing, the square foot number has about a 50-50 chance of being accurate. Unfortunately, square footage is often overstated in the listing information. Agents do not intentionally include inaccurate square footage in their listings. In fact, they do their best to be accurate and sometimes do not include square footage at all, because it can mislead buyers. Generally this will mean one of three things: One, the price per square foot (PPSF) is so high the agent is afraid it will keep buyers away; two, the square footage listed in the tax record is obviously inaccurate; or three, the agent wants buyers to visit the home and discuss the square foot and PPSF in person.
In the multiple listing service, there are nine ways to explain where the agent found the square foot information: per appraiser, architect, builder, condo map, measured by agent, owner, graphic artist, tax record, and “not available.” It is easy to see why square foot inaccuracy is common in San Francisco.
In a listing on the MLS, I found the following information in the “Agent Remarks” section: “All square footages are approximate and are measured from the exterior wall per land surveyor. Price determined on each unit is not based on the measurement accuracy of the square footage.”
This agent was serious about avoiding any discussion about price per square foot.
In San Francisco, comparing properties by PPSF is difficult for buyers. Many homes have been changed over the years. Even in the Sunset District, where there are blocks of homes that look similar on the outside, once you step inside there may be a world of difference.
In large multiunit buildings, PPSF will have more meaning than in single family homes. This is especially true in newer construction where condos have a greater chance of being the same. Still, you will need to take into consideration things such as location in the building and views or lack of them. PPSF will be higher on higher floors. You might find that the original buyer opted for upgrades that also will affect the PPSF.
If square foot and PPSF cannot be trusted, what can? My vote is with “everything else.” Most agents would answer “location.” I think of a home’s location as the center of a wheel, and the rest of life — whether it is going to work, neighborhood restaurants and bars, grocery shopping, or taking children to school — radiates from the hub. In San Francisco, location sometimes feels like a moving target. New buildings seem to spring up overnight, and neighborhoods are rapidly changing. Still, location is the single most important factor in determining the price of a home.
Once you solve the location question, it is time to make a list of everything else you want in a home. To figure this out, you will have to ask yourself what is important. Be sure to include PPSF in your list. The next step is to arrange your list, starting with what is most important and ending with what is least important. You will find that home buyers in San Francisco, even those with unlimited budgets, do not get everything they want.
Often the most important step in buying a home can be accepting that you will not get it all. As buyers search for a home and narrow their focus, it is not unusual for their list of “must haves” to be smaller than at the beginning of their search.
Once you find a home, there are still a few questions to ask. First, does the home feel big enough? A large dark home can feel small in comparison to a smaller bright home with many windows and natural light. Second, will I be happy here? And third, can I afford the home?
Searching for a home is a learning experience. Certainly considering the square footage and the PPSF is important. However, if this is singled out as the number one most important must have, your home choices in San Francisco will become very limited. It is important to remember home inventory is low. Getting everything else in a home and closing escrow is a good deal in today’s real estate market.