When comparing a small house with a large house of similar quality, which of the following is true?
Question & Answer
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A small house costs more per square foot.
This is incorrect because smaller houses typically have higher cost per square foot, not lower. The misconception is that smaller homes should be cheaper per square foot, when in fact they have higher per-unit costs due to fixed expenses being distributed over less area.
A large house costs more per square foot.
Large homes sell better.
This is incorrect because home size doesn't inherently determine marketability. While large homes may appeal to some buyers, they may have fewer potential buyers due to higher price points, making this statement unreliable as a general principle.
Size doesn’t matter.
This is incorrect because size does matter in real estate valuation. Size is one of the primary factors affecting property value and cost per square foot calculations.
Why is this correct?
Large houses cost more per square foot because fixed costs like land, foundation, and utilities are spread over more square footage, resulting in a lower cost per square foot compared to smaller homes of similar quality.
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