Realtor Kathi Hammill with Alain Pinel in Los Gatos said cost per square foot is one way to evaluate the value of a house, but there are other factors to consider as well.

"It only works for homes of similar house and lot size, as this figure always includes the value of the land, too. For example, this method could be used to compare homes selling in Blossom Hill Manor that are about 1,500 square feet on 9,000-square-foot lots. It could not be used to compare to a small two-bedroom home on a lot nearby," Hammill said.

Cost per square foot also doesn't take into account the condition of the home, so a small home that is redone on the inside could go for much more per square foot than a larger home that needs a lot of work.

"I use cost per square foot the most for tract homes and townhomes where these variables do not exist so much," Hammill said. "Appraising a home is sort of like cooking. It takes a little of this, and a little of that, and is not an exact science as some of our clients think it ought to be."

Francine Nelson, a broker at Realty World in Cupertino, figures price by the square foot is a good way to determine value if there are no other comparables available. Homes should be the same square footage and similar in style, quality of neighborhood and area.

"You divide the square feet of the property, not including the garage, into the price and that figure will give you the square-foot value. You can only use similar homes that have no more than a 400-square-foot difference," Nelson said.

All agents must deal with this measure of value when pricing a home or advising homebuyers, said Realtor John Leslie with Alain Pinel Realtors in Los Gatos.

"The belief is that the price should be reasonable. Printing the square foot makes it reasonable for most people. However, any agent will attest to the fact that the property condition throws this price per square foot out the window," Leslie said.

Leslie cited as an example an 1,100-square-foot cottage in Los Gatos located in Almond Grove that would command more than a million dollars if it were remodeled. The same cottage in Willow Glen near the village would go for $700,000, while the same cottage in Campbell would go for $500,000.

"The factoring of condition and location are very subjective, and the client has to rely on the experience of the agent to make sense of the price. Appraisers have the same challenges. Cost per square foot is just one part of the process in determining the market value of any property," Leslie said.

According to Dante Drummond of Coldwell Banker, the cost per square foot measurement is not always a good comparison because the size of the lot, the street location and condition of the property all must be factored in.

"A high-end remodel could sell for more on a cost per square foot basis than a house with average upgrades. Most agents know that the greater the square footage of a house, the more diluted the cost per square foot becomes. Besides, people cannot always rely on the accurate account of square-footage estimates," Drummond said.

Drummond recommends looking for future resale value and tells clients to consider location, schools, potential for expansion, noise factors such as proximity to trains, commercial traffic and other matters such as environmental concerns that could affect the future desirability of the property.

Realtor Dale Klippel of Prudential California Realty said price per square foot is used quite often as a secondary method of calculating the value of property, whether it be from the buyer's standpoint in a purchase or from the seller's standpoint in determining a listing price.

"Square footage should not be the only way in determining where you go with your proposals. It should only be considered as just another means to gain the end result that you are seeking," Klippel said.

Whether a property is updated or not can make a difference. Klippel believes some of the most important updates include newly updated kitchens and baths. Plumbing and electrical, especially high-speed computer lines into the house, are other considerations. In addition, new garage doors with automatic openers, a roof that is within five years new, a surrounding fence, front and back landscaping and both interior and exterior painting are important as well.

Another factor is the location of the property and whether it is near shopping areas, in easy reach of freeways and close to hospitals and doctors as well as fire and police stations. Schools also play an important role. When comparing properties, Klippel looks at whether the school districts are equivalent and determines whether kids would have to walk to school or always be driven. When comparing like properties, he tells clients to consider which neighborhood is the best overall.

"As you can see, there are, and should be, many factors to consider prior to making a decision in buying or selling a home. Take your time, do your homework and everyone comes out a winner. That is the exact reason you want to employ a full-time Realtor to assist you throughout the entire process," Klippel said. "Realtors work extremely hard to bring forth our expertise in all of these areas and in making suggestions that will lead you to the winner's circle."