Generally speaking, the larger the home, the lower the price (or value) per square foot of that home.

As a result, we can't always use price per square foot as a main method for determining the value of a home.

Let's suppose that five homes sold in a neighborhood with sizes between 1,950 SF and 2,050 SF, and they all sold for $200/SF.  Thus... sales prices of about $400K.  ($200/SF * 2000 SF)

If your home (also in the same neighborhood) has 3,500 SF will your home sell for $700K?  ($200/SF * 3500 SF)  Probably not.  As the size of a home increases, the price per square foot usually decreases, as shown on the graph above.

So... if we are looking at relatively similar sized comparable sales (similar to eachother and similar to your home) then estimating the value of your home based on price per square foot might be reasonable.

But if there is a decent amount of variation in the square footage of the comparable homes and/or between those homes and your home... then estimating the value of your home based on price per square foot will likely not be an accurate way to understand the value of your home.