Joan Herlong’s ‘Chanel No. 5’ rule of home valuation

Price-per-square-foot is but one important aspect of analyzing a home’s value, says Joan Herlong of Herlong Sotheby’s International Realty.

“But price-per-square-foot is not the be-all, end-all,” she warns.

Too often, a seller will consult an online service to see what a neighbor sold their home for and use that as the basis of their target price.

“Price-per-square-foot is not a fungible factor in the pricing process,” Herlong says.

Instead, what Herlong often tells sellers is this: “I’m willing to pay $200 for an ounce of Chanel No. 5 in a beautiful cut-crystal bottle that looks pretty on my dresser, makes me smell nice and that makes people think I’m wealthy enough to afford it. Whether full or empty, a tiny bottle of Chanel No. 5 is a big status symbol.”

But while she’ll pay $200 for an ounce of Chanel No. 5 in that cut-crystal bottle, Herlong says no one would be willing to pay $200 an ounce for a 5-gallon jug of it.

“So, when someone tries to cut-and-paste the price-per-square-foot for the petite, perfect home down the block into their giant fixer-upper, the numbers don’t compute,” she says. “They’re essentially pouring their Chanel No. 5 into a big plastic jug and trying to make the numbers work.”

In fact, Herlong routinely confers with appraisers who tell her price-per-square-foot has become almost meaningless.

“Buyers and sellers — mostly sellers — have devalued the term through over-usage,” she says. “Again, it is one small facet of a home’s value. Hence the Chanel No. 5 metaphor.”

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