Price per Sq Ft
Q: I am trying to buy a flat in London – what’s the best way of knowing I am getting good value?
A: Price per square foot is how London estate agents value properties, and mortgage valuation surveyors also heavily rely on this metric when deciding what the property is worth, so it is crucial that you know what price per square foot you are paying when buying a property.
Once you have calculated the price per square foot (divide the price you’re paying by the total internal square footage of the property), you need to then determine whether this presents good value for money versus what other similar properties are selling for in the area. Although we as buying agents have access to this information, it’s generally not publically available – some online property websites provide ‘values’ of properties, but I am always sceptical as they aren’t always accurate and it’s not clear what metrics they use to determine the valuation they are suggesting.
Another source of information is Land Registry data which shows sold prices of other properties on the street, but it doesn’t show you the square footage of the other properties, or photos showing their condition or layout, so you can’t ascertain what the interiors were like.
If you are buying without professional help, there are some steps you can take to give some indication of where the price per square foot value lies. For example, many estate agents keep sold properties listed on their website for weeks or even months after they have sold. Therefore, have a look at any properties being listed which are similar to the one you’re buying. Call the estate agent and if the property is already sold, they will disclose what price it sold for. Then calculate the price per square foot. Some adjustments may need to be made if the sold property was in better condition than the one you’re buying, has a different lease length, or is on a better side of the road. But it will give you a good steer. Then compare this to the price per square foot you’re paying on your own property and check whether it sits in line. This should certainly give you a good indication, and is much better than focusing on what you’re paying for the property versus the asking price, as the asking price is just that – a figure which a seller or estate agent has put on the property and may not represent what the property is genuinely worth.
If you have a question you’d like Jo to answer please email Jo.eccles@eccord.com or tweet her @joeccles.