Value Per Square Foot vs. Price Per Square Foot

When buying a new home, we’ve all been told to ask, “What’s the price per square foot?” But there’s a better way to find the perfect builder and the perfect home for your family. Let us explain and make comparison shopping easier for you when building a new home on-your-land.

Improper Comparisons

Because homes can differ significantly and are built in different locales, a price per square foot gauge isn’t accurate because of improper comparisons. Only when homes are similar in size, geographic location, and built with an equivalent level of finishes can they be adequately compared using this method. In a real-world scenario, it’s hard to find identical homes, so a comparison might not be entirely accurate.

Lowest cost

A home builder can only give you an accurate price per square foot when they know the specific features and finishes of your future home. More often than not, they will provide you with their lowest price per square foot. While they could build a home at this price, is it the right house for you?

Since price per square foot is calculated by taking the total house cost ÷ square footage, a larger home will always have a lower price per square foot. Same applies for comparing two-story and single-story homes. Utilizing this approach, a two-story home will typically have a lower price per square foot. Why you ask? Because a two-story home has a more compact footprint requiring less concrete for the foundation. Additionally, it minimizes the roofing materials needed, unlike a sprawling single-level home with the same exact square footage. If you are looking for a single-story home and receive a two-story price per square foot, you may be surprised when you receive the complete estimate.

Value per square foot

Determining the value per square foot is a much more accurate way to compare home pricing. When you look at value per square foot, you are accessing not only the home price but what value the home builder offers. Ask the builder if you will have dedicated, supportive company employees that will assure your home is built to spec and on-time. Another question to ask is if you’ll have to perform duties (or sweat equity) yourself, such as, interior and exterior painting, or excavating as part of your “owner to do’s”.

Not all homes are created equal – so it’s essential to understand what’s included as an inclusive feature in the home price. Some homebuilders include items in their pricing that the industry standard does not, making those homes more valuable. By looking at the breakdown of a builder’s inclusive features, it’ll help you understand if you’re receiving the best price or the best value.

Now that you know the difference between value per square foot and price per square foot, you are ready to compare home prices. An excellent place to start is Simplicity’s Instant Quote Tool where you will receive transparent, online pricing. It’s directly tied to our in-house estimation software, providing the most accurate, up-to-date, and detailed pricing that can be provided in the industry.

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