Just curious -- how much is a bedroom worth?

Question

We have an interesting situation where both properties on either side of our house are selling.  (We are honestly very nice neighbors, really!!!)

Our 80 year old neighbors moved to a senior apartment and sold to a nice family.  Our other neighbor just sent off her youngest to college and is now a single empty nester and is downsizing also.

Both of these homes are 3 bedrooms.  Our home is 4 bedrooms.  I am curious about the value of our home based upon what will be the "comps" of our two neighbors' homes.

It's really not a big deal, because we plan to stay here for many more years, but I am curious about the rough value of our home.  Thanks!!

Jon Holdman · Answer

The size difference is more important than the fact its a bedroom.  A four bed house the same size as a three bed house will get about the same price.  Appraisers use an adjustment factor based on size.  Its typically a third to a half of the $/sq.ft. selling price.  Chopping space into a bunch of small bedrooms, for instance, won't add any value and at some point will hurt value.  Most people don't want a "bunkhouse".

Also keep in mind ground floor square footage is more valuable than second floor, and basement is worth the least of all.  A ranch without a basement of a given size will be quite a bit higher in value than a two story of the same finished size, but with the footage split between the ground and second floor.  And both will be higher valued than a ranch with basement with the footage split between the ground floor and basement.

Bill Larsen · Answer

Here in LA county we usually adjust $5k-$10k for a 3 to a 4 bed.  The big difference is when we try to compare a 2 bed to a 3 bed, that jump couple be up around $30k.  Seems to be a different market

Jon Holdman · Answer

@Karen M.  you're not the only one who likes ranches.  Or, as a mover once called one I was moving into, a "flat house".  That's why ground floor footage is ultimately the primary factor in valuing a house.  At least around here, second floor footage is worth about half what ground floor footage is worth.  Basement footage is worth maybe 10% of the value of ground floor footage.

Sometimes investors, especially new ones, want to use a $/sq.ft. factor and simply multiple by the size of a property they're evaluating.  That doesn't work, either.   A house that's 10% larger is usually not worth 10% more.  And vice versa.  Appraisers will come up with an adjustment factor that's based on the $/sq.ft. selling price.  But its typically a third to a half of the overall selling price per sq.ft.  They multiple the difference by this factor to come up with an adjustment.

If you have access to an appraiser or to it would be worthwhile to have a discussion about what factors they consider and how they compute adjustments in your area.

Mehran K. · Answer

You can check to see if there's other 4 bedroom homes similar to yours that have sold within the past 6 months and are in the same neighborhood boundary, preferably less than half a mile radius away. If there are, you can probably see the difference that extra bedroom (and hopefully more square footage) typically makes as far as value.

Appraisers will basically do the same thing, adjust for the extra bedroom among other thing based on what their "opinion" is of that bedrooms value, which is usually based off comps mentioned above.

That adjustment will be different all over the country, it's all local. An extra bedroom could be an extra $10-$15k in Milwaukee, but be an extra $75k here in Los Angeles.

Richard C. · Answer

One warning.  That whole ground floor premium thing is very market dependent.  Places (like this one) where two-stories are the norm (and preferred by many) you will get no real premium for the ground floor space.

Karen M. · Answer

Thanks Mehran and Jon for your comments, great info.

This is good practice, just to look at prices and what's been sold lately.  I will look into 4 bedroom properties in our area and see what they have been going for.

Jon, I was just wondering about that topic of ranches vs. 2 story houses.  I personally *love* one story homes or homes that have a a large first floor living area, it is interesting to find out that these floor plans are better-valued overall.  Good to know, and interesting.

Just curious -- how much is a bedroom worth?

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