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  #1  
Old 11-02-2011, 11:14 PM
FeeSimple FeeSimple is offline
 
Join Date: Jun 2009
State: Washington
Professional Status: Certified Residential Appraiser
Posts: 143
Default bedroom count and marketability

I need some advice putting some words together...

I have a 3300 sq ft house (all above grade). It has 2 bedrooms, overall good quality and condition.

Due to a lack of sales, I had to compare it to 3 and 4 bedroom houses, in addition to 2 bedroom homes.

The underwriter wants a comment on the difference of marketability between the 2 and 3 and 4 bedroom homes. (I only adjusted for square footage differences, I don't feel the differences in marketability can be considered in a monetary adjustment, and there is no cost diffence).

I agree that the homes might have a difference in marketability for certain demograhics... households with more kids may be more inclined to buy a home with superior bedroom count, alternatively... an aging population with an increasing retirement age demographic may be more inclined to purchase a house with fewer bedrooms, but perhaps equal square footage of alternative use.

How should I word this, as to not start a ****storm.

(This may be 'appraising 101', however comes up from time to time, and I like to have as much insight as possible so I can think things through).
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Old 11-02-2011, 11:24 PM
Randolph Kinney Randolph Kinney is offline
 
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Location: SoCal
State: California
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Default

Quote:
Originally Posted by FeeSimple View Post
I need some advice putting some words together...

I have a 3300 sq ft house (all above grade). It has 2 bedrooms, overall good quality and condition.

Due to a lack of sales, I had to compare it to 3 and 4 bedroom houses, in addition to 2 bedroom homes.

The underwriter wants a comment on the difference of marketability between the 2 and 3 and 4 bedroom homes. (I only adjusted for square footage differences, I don't feel the differences in marketability can be considered in a monetary adjustment, and there is no cost diffence).

I agree that the homes might have a difference in marketability for certain demograhics... households with more kids may be more inclined to buy a home with superior bedroom count, alternatively... an aging population with an increasing retirement age demographic may be more inclined to purchase a house with fewer bedrooms, but perhaps equal square footage of alternative use.

How should I word this, as to not start a ****storm.

(This may be 'appraising 101', however comes up from time to time, and I like to have as much insight as possible so I can think things through).
What is the general make up of the neighborhood as to percentages of 2, 3, and 4 bedrooms? As you indicate, there were 2 bedroom homes that sold. If you can't discern a market reaction among the bedroom count, that tells you the market acceptance of same with no penalty.

If you have a neighborhood that is "kid" driven, then there will be a difference. I live in a neighborhood PUD that has 20% 2 bedroom / 2 bath with 40% 3 bedroom / 2.5 bath and 40% 4 bedroom / 2.5 bath homes. In addition to a smaller GLA for the 2 bedroom / 2 bath, there is a penalty for being 2 bedroom / 2 bath.
  #3  
Old 11-03-2011, 01:33 PM
Michael S Michael S is offline
 
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Location: Albuquerque
State: New Mexico
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This reminds me of a story told by the teacher of my basic appraisal classes. She appraised a two-story home that was probably a 3 bedroom originally. The owners didn't have kids so they tore out all the walls upstairs and turned it into a single huge master bedroom/suite. Not a lot of buyers for a one bedroom home.
  #4  
Old 11-03-2011, 01:36 PM
FeeSimple FeeSimple is offline
 
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State: Washington
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Quote:
Originally Posted by Michael S View Post
This reminds me of a story told by the teacher of my basic appraisal classes. She appraised a two-story home that was probably a 3 bedroom originally. The owners didn't have kids so they tore out all the walls upstairs and turned it into a single huge master bedroom/suite. Not a lot of buyers for a one bedroom home.
I think a huge marketability difference exists in my market between 1 and 2+ bedroom homes.. however 2 to 3, 3 to 4 is all determinate upon demographic and buyer personal preference.
Thanks for the story though.
  #5  
Old 11-05-2011, 09:57 AM
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J Grant J Grant is offline
 
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State: Florida
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A lot would depend on floorplan and layout (and overall price of homes, demographics, etc). It sounds like you found some 2 bedroom comps, was there a price difference of similar size 3 bedrooms? Since you found some 2 bedroom comps, it sounds as if 2 bedroom homes are desriable in the area, so marketability might be similar, depending on type of neighorhood etc.

A 3300 sf house is large and there is certainly enough space it would seem to build a bedroom or convert a room to a third bedroom...is there a den that could be converted? Some models are 2 bedrm plus den or the option is a 3 bedroom of same size or equiv size...only you know your subject and area.

Imo , when an original floorplan is so small or restricted that an additional bedroom CAN'T be added, especially when comparing 2 bedrooms to 3 bedooms, such as in a townhome or condo or very small house where you would have to build an expensive addtition, that is usually when the market shows a marked difference in price.

Markets often show a big jump between one and two bedrooms, a mid size jump between 2 bedrooms and 3 bedrooms, and less of a jump in price or none between 3 bedrooms and 4 bedrooms...anything over 4 bedrooms is usually just an option and unless the area is filled with large families who really need so many bedrooms, the 5th or 6th bedrooms often sit empty or are turned into guest rooms of TV rooms and rarely used.

If your area homes are appealing to a range of buyers with the bedroom count depending mainly on personal buyer preference for which house they might choose, then your comments would reflect that.
  #6  
Old 11-05-2011, 10:13 AM
NorthTexValuation NorthTexValuation is offline
 
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State: Texas
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Others have similar advice and I would run all comps in the neighborhood and get the % of 2, 3 and 4 bedroom houses. Then I would run all comps in your sf range and get the % of 2, 3 and 4 bedroom houses and include this research in the report and attempt to see if there is a difference in that market for less bedrooms.

Of course the easiest wasy to reconcile was suggested. Could one of the other rooms in the hosue be easily converted to a bedroom at relatively low costs. If so, reconcile that point.
  #7  
Old 11-05-2011, 11:31 PM
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Terrel L. Shields Terrel L. Shields is offline
 
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"With smaller families, open room designs, and age demographics, we were unable to determine any difference in market reaction between 2, 3, and 4 bedrooms."
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  #8  
Old 11-06-2011, 12:33 AM
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Delta85 Delta85 is online now
 
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In my area a 3300 sq. ft. home with 2 bedrooms would be reasonably comparable to similar sized 3 or 4 bedroom homes. 3300 sq. ft. is a well above average sized home in CT. and the people in the market for homes of that size could easily afford the cost to convert some of that living area into a 3rd bedroom and even a 4th. With a home of that size it's not hard at all to go from 2 to 3 bedrooms.
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