What is the effect of square footage on a real estate appraisal?

Answer 1

Square footage is a unit of measure. In and of itself square footage does not effect real estate but rather is a means to describe the real estate. Depending upon what type of real estate, the square footage is the single most important element of the appraisal (other than intangible issues of location). Land is offered in acres (43,560 sq ft), office space listed in dollars per square foot. Homes are appraised, in part, on the amount of living space, in square feet, along with how that area is used (bedrooms, baths, etc).

In some cases, just the fact that the square footage is higher or lower than an ordinary breakpoint in pricing or availability will substantially change the value of a property. For example, if you're looking for 10,000 square feet of office space, you probably won't want ten separate 1,000 sq ft offices because of the increased operating expenses and carrying costs. Similarly, if you want an investment in timberlands, anything less than, say, 50 acres will not be worth further evaluation.

Generally, local estate agents, appraisers and assessors will evaluate the price per square foot of a given property in the context of other local properties having comparable size (and other important features), which tends to minimize the differences in the "location" factor.