3 Bedroom Converted To 2 Bedroom?

[Jordan Scott]

Thanks for your help

 

[CURT VAN HOOSER]

I can't quite picture what you have here. They put up a wall and removed a door? Just out of curiosity, what is the room used for now?

 

[Jordan Scott]

2 Bedroom

The room is now used as just a larger bedroom. It was orignally 3 bedrooms, but they took out the door to one of the bedrooms and removed the wall. So now its just one large bedroom making the house only 2 bedrooms.

 

[hastalavista]

Jordon-



When you say you cannot find any two-bedroom townhomes, do you mean:
a. You have none as "comps".
b. None exist, period, regardless of when they sold?

If none exist, period, I would use that as a strong indicator of lack of market demand, and make a functional adjustment (cost to cure) to bring the subject back to its 3br configuration.

If the case is that you just don't have any recent comps, you can go back in time and see what the difference in 2br vs. 3br townhouses were in the past ("paired" or "matched" sales analysis); you may find that an absolute $ or % adjustment for the bed-count difference is appropriate.

As a rule, unless my subject is in a "active adult community (min. 55-yr old owner on title), I would find the market difference in 3br vs. 2br homes to probably exceed the cost to re-convert your subject back to the 3br configuration.

I believe (usually) that converting something back to its original configuration is far easier (because that is how the improvement was originally planned and built) vs. converting it into something it wasn't designed for.

Good luck.

 

[Jordan Scott]

Comps

What I was trying to say was I have no comps that have sold recently that are 2 bedroom. Would that fact that the house was originally a 3 bedroom make a difference on the adjustment compared to if the house was originally a 2 bedroom. Basically I am trying to figure out if it would even be necessary to make an adjustment considering the house was orignally a 3 bedroom and I would just explain that in the addednum.

 

[Lee Lansford]

Jordan, no disrespect intended here...but I surmise from your postings elsewhere (i.e., you're asking for assistance with exam questions) in the "forum" that your license status is "trainee". Thus...what does your Supervisory Appraiser have as a response to your question?

Lee

 

[hastalavista]

Would that fact that the house was originally a 3 bedroom make a difference on the adjustment compared to if the house was originally a 2 bedroom.

I somewhat answered that, but I'll be more specific:
IMO, it does matter! Since the house was originally configured to be a 3br, it stands to reason that returning it to such (assuming no other modifications were made) does not call for structural changes (unless the wall that was removed was a load-bearing wall, in which case there would be a big issue) and maximizes its utility (unless 2br townhouses are purchased at a premium in your market).

Basically I am trying to figure out if it would even be necessary to make an adjustment considering the house was originally a 3 bedroom and I would just explain that in the addendum.

This is a judgment call on your part. Would the market react in a value discount if the typical buyer purchased the subject and wanted to re-convert it back to a 3br unit? This question is sometimes best answered in the context of what the current supply/demand and value trend is. In past rising markets, I would have argued that the demand of townhouses was so much greater than the supply, that the buyers would not expect any discount for the additional cost to re-convert. In my market's current environment, that's not the case.

I would also agree with Lee's comment and I also read your other post. Are you working with a mentor/supervisor, and if so, are you getting adequate advice from her/him? I am not trying to "pick" on you either, but knowing your experience background and how you are approaching (or, being told to approach) these types of problems will be helpful to me (and, perhaps, others) to determine how best to respond.

You should use your own due diligence in determining if my (or any others') answer is appropriate to your specific situation.

Let us know more if you can.

(Ps- Sorry about misspelling your name the first time. Happens to me all the time!).

 

[Brad Ellis]

Jordan,

Denis' first post was right on target- your cost to cure will limit the functional loss- BUT you need to know if the market will penalize this home because it is 2 BR. Nothing is automatic.

If you have no 2 BR sales in this complex but they exist, you can derive the differences by historical data. If they exist but no data is available, try a competing complex with similar homes.

Brad

 

[Mr Rex]

In addition to Brad and Denis posts, remember that in your Cost to Cure, "simply" reinstalling a wall is not necessarily cheap. The new wall will have to have electrical outlets (BTW, waht did they do with the prior receptacles, if they turned into floor outlets, minimal electrical costs, if completely removed, more $$$). Also ,waht happens to the finished floors now in place during install of new walls. Drywall dust and drywall mud are very dirty and tend to get on everything, not to mention painting etc etc, so I would talk to reputable General Contractors (not Joe Pick-up Truck or what you think it might cost) to get an idea of the actual cost to cure. You will likely be highly surprised, that one little wall and a door can cost so much, may or may not exceed the market reaction to the 2 BR versus 3 BR.