Question

Suppose you are asked to estimate the value of a 3 bedroom, 2 bathroom house by the sales comparison approach. You have identified two houses that have recently sold in the area. One of these houses has 4 bedrooms and 2 bathrooms and sold for $215,000. The other has 4 bedrooms and 3 bathrooms and sold for $220,000. Your research reveals that an additional bedroom adds $16,000 to the value of a house in this market and that an additional bathroom adds $5,000 to the value of house in this market. What is the indicated value of the subject property?

Answer 1

The indicated value of the subject property will be $199,000.

The subject property has 3 bedrooms with 2 bathrooms. Since an additional bedroom adds $16,000 to the value of a house in this market, the property can be valued using the house that recently sold for $215,000 that has 4 bedrooms and 2 bathrooms.

$16,000 is therefore deducted from $2`15,000 to arrive at $199,000.

Step-by-step explanation:

In real estate market, the Sales Comparison Approach is an appraisal method that compares a property with others with similar characteristics of features.

This approach helps real estate professionals and buyers to determine the fairness and comparability of the values of properties using various attributes. One of such characteristics is the number of bedrooms and bathrooms in a house.