GLA adjustments of condos compared to single family properties

[Valueseeker]

Hello everyone,

I am given information from Chat GPT that GLA adjustments for condo properties are generally lower than if the property was theoretically a single fgamily and comparables were also single family. So without the site adjustments being needed, condo GLA adjustments generally should have lower values if it was compared to a similar size difference comp range. I get that this is theortical but would that make sense? shouldnt condo GLA adjustments generally be higher? TIA!

 

[Terrel L. Shields]

i'd try to find condo comps first.

 

[Joe Flacco]

It really depends on the condo. In some buildings you might see larger units sell for lower price per SF and smaller units selling for a higher price per SF. In other buildings, the adjustment is often close to dollar-for-dollar on the price per SF.

 

[TerryRohrer]

I agree with the conclusion, but not due to the omission of land. In most residential valuations, buyers are focused on the dwelling, not the land or the land value (until the land becomes the focus of buyers in a particular market). In many condo markets, the homogeneity of the sales drives the results...often, every sale is similar in age, quality, location, and, particularly, GLA (and sale prices). If there is little variation in sale prices, there is little to explain. If there is little variation in any variable, that variable has little explanatory value, and would be expected to have a small impact. But, in a case where you might have 3bd, 2bd, and studio units in the same development, GLA will likely increase and explain more of the (likely) greater variation in prices.

 

[Tom4value]

What do people prefer more, an EV Tesla or a Ford F350 Super Duty?
Kind of depends on what your wants and desires are, right? For simplistic generalization, consider: 2 bedroom ranch, 1,000 sqft sells for x. 2,000 sqft., 2 or 3 bedroom ranch sells for y. Difference supports a, say, $50/sqft. adjustment. You are young with a kid at home so that extra space is worth $40 grand.

The owner of that 2,000 sqft. ranch now thinks it is too big for the two empty-nesters so they look at condos. They see 2 units in a development they like, one is 1,000 sqft, the other is 1,800 sqft. Sure, 1,800 sqft is less than 2,000 sqft so technically a downsize but would you really pay $40,000 more over the 1,000 square footer that is really more to your current wants?

 

[JTip]

500sf condo and a 2,000sf condo in the same association will generally share the SAME common amenities.

A fee simple house has it's own amenities, if any.

 

[J Grant]

I would not trust anything Chat GPT has to say on the subject..

Some condos sell for more per sf than certain SFR and some SFR sell for more per sf then some condos. Normally, one does not use them as comps for each other so it really does not matter.

I do, however, find that the adjustment of price per sf on a condo unit can be higher because there is no yard, pool, garages, or other site improvements that account for a portion of the sale price.

 

[Mark K]

Did you ask Chat GPT for the updated list of adjustments?

 

[sputnam]

ChatGPT and the other chat bots want to please you. They want to give you the answer you asked for. They don't much care about whether the answer they give you is true or not. Be very careful about relying on analysis by AI.

 

[J Grant]

With a SFR purchase, the lot (land ) is baked into the sale price. With a condo, the building amenities and services /maintenance is baked into the sale price.
When appraising SFR or condos, we compare similar to similar - a buyer looking for a luxury condo building with valet parking, doorman, fancy gym and pool with a monthly HOA of $980 is not be the same buyer for a plain condo with few or no amenities that has an HOA fee of $230. A buyer for a house on 3 acres is not the same as a buyer for a tract house on a 7000 sf lot.

That is why every appraisal is unique and why AI or data-driven AVM-type programs can get it wrong.