Nashville is a price-per-square-foot town. When searching for homes, the general public is obsessed with square footage and the list price and the correlation of the two. It is understandable in some ways, as the cost of materials is more for a 2,000 square foot home versus a structure with only 1,500 square feet.

Yet bathrooms, kitchens, garages, basements and the finishes are often overlooked and, consequently, undervalued. One reason for this situation is that the homebuyers have been trained by real estate agents that price per square foot rules the day.

When an agent is invited into a home for a listing presentation, the comparative market analysis will feature price per square foot. The agent will insist the house be priced accordingly.

And in these discussions, the agent is accurate that many appraisers operate by that model, although all appraisals allow for adjusting values based upon the appraisers’ assessment of amenities, to a certain extent. However, the appraisers are limited in that they cannot appraise a home for $220 per square foot when the highest sales price in the area is $120 per square foot.

To that end, appraisers and real estate agents alike use comparable sales, or comps, in order to establish value. However, the comps may not truly be comparable. If a house has a well basement with 2,000 square feet of space, ceilings that are 6 feet, 10 inches high with $40 per yard carpet, six-piece crown molding, an elaborate sound system, a wine cellar with cabinets and racks that can house over 2,000 bottles of wine, it has little or no value.

Ironically, if the space happened to be upstairs with another one foot, one inch of height and a few windows, it could be worth $250 per foot in the right area, or $100 in another area 10 minutes away. So the value is nothing or maybe a $5,000 adjustment, or a value of $200,000 or as high as $500,000. Hence the term bargain basement. Almost all basements are bargains.

Hence the “location, location, location” adage, as it all depends on where the home is loacted.

Yet another conundrum: It costs the same amount to build a house in one area as it does 30 miles away. The materials are purchased from the same supplier, the sub contractors that apply their trades are working in 100 mile radii. So, for the purposes of argument, assume a builder can build for $150 per square foot and build a 3,000-square-foot house, the cost of construction is $450,000. In Green Hills, Belle Meade, Sylvan Park, 12 South, Oak Hill, Forest Hills, Brentwood, Franklin, and some peripheral areas, the house could sell for $200 per square foot or slightly more, meaning the builder would need to purchase the land for $150,000 in order to break even with no soft costs.

When the recession hit and prices dropped, it became difficult for builders to acquire land, develop the area and construct houses for prices that could compete with existing homes. In short, homes were selling for less than a builder could build the same house. Therefore, new construction slowed, or stopped altogether.

What is perplexing to many is the fact that high-rise condominiums, even at last year’s bargain-basement, foreclosure-ridden, receivership-priced market, were selling for $300 per foot. Now Icon boasts a few $600-per-square-foot sales.

These sales were cash, as no appraiser could appraise the property at a price that high, and no bank would loan that much money on such a property. Why? Because it isn’t worth it. That’s odd; someone wrote a check for it.

Richard Courtney is a real estate broker with Pilkerton Realtors and the co-author of Come Together: The Business Wisdom of the Beatles.