2 vs 3 bedrooms

[Carrie Lake]

My subject property has two bedrooms with private baths (two bathrooms). I cant find any two bedroom sales that are similar to the subject property. How do you normally adjust for bedroom count? Thanks for your input.

 

[Tom4value]

Usually, I don’t and just go by GLA adjustment. I say usually because you may be in a market where it will be an issue. To make sure, find any sale that has 2 bedrooms. It doesn’t necessarily have to be comparable to the subject property. Then compare it to other 3 bedroom sales similar to that property. If there are no noticeable differences sales prices AND marketing times, then you can say the 2 bedroom is not an issue. By all means, explain what you did or else the underwriter will ask for a 3 bedroom comp.

I say 3 bedrooms because I am assuming that your comps are not 4 or 5 bedrooms. In that case, they are not really comps.

 

[George Hatch]

I look to see how 2bd units have compared to 3bd units in the past, and import that ratio for use with my current 3bd comps.

 

[Mike Kennedy]

My subject property has two bedrooms with private baths (two bathrooms). I cant find any two bedroom sales that are similar to the subject property. How do you normally adjust for bedroom count? Thanks for your input.

research and considering using A. dated (over 1 year old sales AND/or B. Contracted Listings AND/or C. Active Listings or all 3 in addition to the most similar 3 br sales closest in proximity, age, and other attributes. The research usually gives you (and your client) a clear picture of the 2 BR market locally.

 

[Mr Rex]

Back, back, way back. Here 2 BRs sell for a substantial discount over 3 BRs. Not much difference between 3 or 4. As an aside there is a local investor that pays a premium for 2 BRs as it limits the number of potential occupants and damage etc, that skews the data if you don't pay attention that there is not typical motivation when you compare to other 2 BR sales.

 

[Bob Ipock]

As a general rule, people who want and need 3 bedrooms are not going to buy a 2 bedroom house. The typical buyer is not going to consider a 2 bedroom house to be equivalent to a 3 bedroom.

 

[Terrel L. Shields]

Check similar 4 plex or apartments for rent info. If the third bedroom is more expensive in a similar sized apartment, then likely the extra bedroom may have more value. How much? Not much, I suspect. But if I have a 2 bedroom 800 SF renting for $800 and a 3 bedroom 1100 SF renting for $1,100...well...looks to me like there is no difference that isn't accounted for with the SF alone.

 

[Joe Flacco]

It depends on what kind of buyers are buying these properties. If it is a neighborhood and property type that families are buying then two bedrooms is going to be a big problem. If it is a neighborhood and property type that younger people without kids are buying then it is probably not going to be a issue. They might prefer two larger bedrooms than one large bedroom and two small bedrooms.

 

[sputnam]

My subject property has two bedrooms with private baths (two bathrooms). I cant find any two bedroom sales that are similar to the subject property. How do you normally adjust for bedroom count? Thanks for your input.

It is a market question and should be extracted from the market using a supportable method. In the markets that I'm familiar with.. there is a reaction to 2 vs 3 bedrooms. If you don't have current data available, try looking back in time for a pair. Extract the difference, if any, as a percentage and then apply the percentage to your adjustment. BTW, there are more than 30 techniques to extract adjustments from the market. A lot of appraisers only know a few of them. Learning more can make your life much eaiser when you run into situations like this.

 

[Mark K]

Depends on the area and the buyers. I've seen otherwise similar homes sell for a large differential for a 2 BR vs. a 3 or 4 BR floor plan, a differential that far exceeds any size adjustment.

Other areas, no difference. It is usually very neighborhood specific.