How to adjust the value of the Comps on a Rehab?

6 Replies

Dear all,

        I was reading J Scott's how to flip real estate book. How do I figure out the values to adjust the comps? For example, how do I figure out how much a bathroom is worth?

Thank you

Sam, you really have to look at comps in the area, ie a 3 bed 1 bath vs a 3 bed 2 bath, how much more does the 3/2 sell for than the 3/1?  Also, make sure to take into consideration the condition of the properties, ie if the 3/1 has a brand new roof and furnace and the 3/2 has a 20 year old roof and 15 year old furnace, odds are the 3/1 will sell for more. You can always contact a good agent in your area and ask their opinion, they should be able to give you a good estimate as to if it's worth adding the extra bathroom or not.  

But like not every property is going to be the exact same. For example, the 3 bed 1 bath may have extra square footage( or some other amentity). How then do I calculate what the extra bathroom will be worth?

@Sam Fogelson , it is both a game of averages.  You are right, no two properties are ever the same.  Even in a subdivision where every house is as close to the same as the other, there are still differences.  One has better landscaping, or more neutral interior paint colors.  Half the time it comes down to furnishings inside the house causing one to show much better than the other.

You need to control for one variable at a time.  There is no set science to this.  It is an art, and a fairly subjective art at that.  Most people don't shop based on sq ft, they shop on beds and baths, and other amenities.  So I would not be overly concerned that the 3/2s are a little bigger than the 3/1s.  But if you are having that much trouble with it, ask an agent for help.  They live in your market and will have a sense of what it is worth.