What is the Square Footage Adjustment Factor?

What is the Square Footage Adjustment Factor?
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Published By Jennifer Jewell

Question: What is the square footage adjustment factor?

Answer: The square footage adjustment factor is a numerical value used in real estate appraisal to adjust the price of a property based on differences in square footage compared to a standard or benchmark property. It helps ensure fair and accurate property valuations.

What is the Square Footage Adjustment Factor? Introducing the Square Footage Adjustment Factor

You’ve likely come across the term square footage when dealing with real estate. It’s a standard measure of a property’s size. However, when assessing the value of a property, size alone doesn’t paint the full picture. Here, we introduce a critical tool in the appraiser’s toolkit – the square footage adjustment factor. This factor adjusts the property’s value based on size, ensuring a fair comparison with other similar properties.

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Related Article: What is Included in Square Footage of a House in Ontario?
Related Article: How is House Square Footage Calculated in Canada?

Adjusting for Size

The square footage adjustment factor plays a key role in property appraisals. It ensures appraisers take into account the size differences between properties. If you compare a large house to smaller homes in the same area, it wouldn’t be a fair comparison. The adjustment factor levels the playing field, adjusting the larger house’s value to provide an accurate assessment. [ 1 ]

Crunching the Numbers: How to Calculate the Square Footage Adjustment Factor

The calculation might sound tricky, but it’s straightforward. You first determine the per-square-foot value of a comparable property. Then, find the size difference between your property and the comparable one. You multiply this difference by the per-square-foot value of the comparable property. The result is the adjustment factor. This step-by-step approach makes the calculation manageable.

It’s All About Context: When to Use It

Appraisers don’t use the square footage adjustment factor all the time. They use it when the property size significantly differs from comparable properties. If the property sizes are similar, the adjustment factor becomes redundant. Furthermore, if plenty of comparable properties are available, they offer a more accurate value assessment, eliminating the need for adjustments.

Keeping It Real: The Limitations

While it is a useful tool, it does come with limitations. It focuses solely on size, ignoring other property value influencers such as location, layout, and overall condition. So, it’s not a standalone tool but forms a part of a comprehensive property appraisal.

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A Practical Example

Imagine appraising a 2,000-square-foot house in a neighborhood where comparable houses measure about 1,800 square feet. If the average sales price per square foot in the neighborhood is $200, you’d calculate the adjustment factor as follows: 200 (price per square foot) x 200 (difference in square footage) = $40,000. Consequently, you’d adjust the 2,000-square-foot house value upward by $40,000, ensuring a fair comparison with other homes in the neighborhood. This example shows how the square footage adjustment factor plays a critical role in obtaining an accurate property appraisal.


1. https://birminghamappraisalblog.com/realtor-tips/how-agents-can-adjust-for-square-footage/

Jennifer Jewell Avatar

Jennifer Jewell, a licensed real estate representative serving Caledon, Orangeville, Shelburne, Dufferin County and Peel. A graduate of both Humber College and the Ontario Real Estate College Jennifer earned her stripes selling a high volume of real estate in the city, gaining the experience of handling twenty-plus multiple offer situations with a top one percent, multiple award-winning real estate group. A ten-year resident of Dufferin County Jennifer made the move north and quickly made a name for herself, with a reputation for tenaciously protecting her client’s interests. Jennifer is dedicated to serving you with savvy client-focused negotiations and state-of-the-art marketing strategies. Loyal clientele, personal referrals and repeat business form the foundation of Jennifer’s career offering seamless assistance to you for every aspect of your home purchase or sale. Contributor to the Toronto Star, Orangeville Banner and Caledon Citizen as well as being named ThreeBest Rated Five years straight with over 150+ Google reviews and growing. Get in touch with Jen here.