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Room Count Difference

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Debra

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
Hello!

What I want to know is what adjustment you use for the difference in the number of rooms between the subject and the comparable? Thanks Debra :o ;)
 
Debra ~

It depends.

For overall difference in the room count -- probably nothing.

For Bathrooms -- yes, most of the time (depends on where they are in terms of actual ultility).

For difference in Bedrooms -- usually only for between 1 and 2...

BECAUSE, overall Square Footage and how the house is laid out will probably account for Bedrooms 3 and up.

AND, you have to leave a little leeway for slight variations in floorplan.
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NOW, if you are forced into using widely different comps due to lack of sales activity, you might find youself in a situation where you need to adjust for the number of Bedrooms above a quantity of 2.

My response is a bit cursory.
 
Thanks for the reply!

I usually adjust for bathroom count differences. Now I'm being told that they need me to adjust for other room count differences and I don't have a clue about that. I don't really think that it's necessary...the homes are all very comparable in square footage...comment? Debra
 
The only way to know if it is really justified is to let your market tell you. Do some matched pairs. Sure it takes time away from the work but it's the only way to know. Once you do them create a file folder and save it. Put all you matched pairs together and when you need them you can show why you did or didn't make an adjustment. It the only acurate way to know and much more accurate than just guessing. :mrgreen:

Now with that said sometimes you just can't find matched pairs. I run into that often in out small market. But when you can the answer becomes obvious.
 
as stated above ... it depends.

Take a 7-3-2 1600sf vrs a 7-4-2 1725 sf. ... likely an adjustment for the room/footage (not both).

7-3-2 1600 sf vrs 7-4-2 1600 sf ... you now have several points of view (and it depends on your data/market).

Some might conclude that the 4th bedroom adds utility and appeals to a larger market, others might conclude that the 3 bedroom model has larger rooms and appeal.

In my area we can make a case for either (depending on product). I think if the sf is the same and a 3 vrs a 4 ... no adjustment, a matter of choice/preference. In a case of a 2 vrs a 3 or a 4, then a possible functional utility issue as most of my market goes for 3 - 4 bedrooms ... the adjustment in that case may be in the utility area, not the room count.

It all depends on whats acceptable in your market and what analysis of the data tells you ... it could simply be a longer marketing time, hard to say without specifics and data from you market.
 
Debra,
Let the market answer your question. Do two bedroom houses sell for less than three bedroom houses of similar square footage in your area? Do houses with more rooms sell faster? or for a greater percentage of list price?

Thee are no hard and fast rules, just the appraisers judgement, thats what they pay you for.
 
Generally, overall room count takes care of itself with the square footage (except in very unique circumstances). Bedrooms can make a difference.....sometimes. It depends on the market. For example, normally I would adjust between a 2 bedroom home and a 3 bedroom home. However, on some smaller homes, the square footage adjustment actually will take care of the bedroom adjustment. In lake resort areas, there turns out to be no market differential between 2 bedroom homes and 3 bedroom homes due to the typical buyer (generally older and looking for a retirement home).

So, I would look at bedrooms and baths, adjust everything else, then see if the sales really indicate an adjustment (adjusted sales outside of the normal range of adjusted values).

Roger
 
Never been ask to adjust for rooms. If the underwriter wants this ask them to give your the justification from the Fannie Mae guidelines.

We handle it in the square footage of the property except for baths.
 
Now I'm being told that they need me to adjust for other room count differences and I don't have a clue about that

You could with some care in selecting paired sales, calculate a bedroom adjustment. The problem is avoiding "double dipping" adjustments. Your GLA adjustment will likely go down if you adjust for bedrooms. Often a large difference in room count suggests a functional problem.

I know a dwelling where the sellers were telling me they were having trouble moving the dwelling. I saw why quickly. A 3,500 Home had about 15 rooms. The third floor had four rooms, all small. ditto for the second floor, not a room over 14 x 12. There was not one well designed room in the house...the sellers had built it to their specs and wanted all these cubby holes. Took 2 years to market. I understand the buyers cut holes in the walls between rooms to make bigger rooms. reduced the bedrooms from 6 to 4. This is a functional obsolescence problem rather than a market reaction to 3 vs 2 bedrooms. As more empty nesters come on the market, I think the 2 vs 3 bedroom differences will disappear or even reverse (2 bedroom will become more desirable)
 
I have said this before....many of our builders are building two bedroom homes now for that "empty nest market". The are also very popular with new marrieds on a budget. No stigma here for two bedroom homes.
 
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