ARV Confusion

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I'm having a little difficulty estimating the ARV on a short sale. I have 2 recently sold comps for the subject property. Here's the breakdown:

Comp 1:
Sold Price:$189,900
DOM:61
Square Footage: 2067
Year Built: 1961
4 bedrooms
2.5 bathrooms
Date Sold: 2/2011

Comp 2:
Sold Price: $185,000
DOM: 29
Square Footage: 2070
Year Built: 1961
4 bedrooms
2.5 bathrooms
Date Sold: 12/2010

Subject Property:
Accepted Offer at $65,000
Repair Estimate: Finding out Monday
Square Footage: 1797
Year Built: 1961
3 bedrooms
2.5 bathrooms

All are the same style. I was advised to calculate the ARV based on price per square feet. When I did this, I came up with an ARV of $162,846.33. Basically, I averaged the 2 home sales and divided this average ($187,450) by the average SF (2068.50). The price per SF came to 90.62, and I used this value and multiplied it with 1797 (subject property's SF). My concern is this: Is it really appropriate to knock off $24,603.67 from the subject property's value because of 1 less bedroom and a smaller SF?

Thanks in advance for your replies.

[Jon Holdman]

You need to find some three bed houses to get a reference point. An appraise will not use the method you describe. Instead, they will come up with a per sq.ft. adjustment factor. On the appraisals I've seen, this is much less then the $/sq.ft. sales price, often half or less.

You also need to consider the style. If all three of these are ranches without basements, you're in good shape. If some have basements, some have second floors, etc., you have a problem.

Are these ALL the comps available? Nothing else similar and nearby sold in the last six months? You must avoid cherry picking the two best comps. In your position, you want to know ALL the comps an appraiser might choose. In 2006, an appraiser might pick the highest ones. Now its much more likely they will pick the lowest ones. Don't fool yourself by cherry picking the best ones. An appraiser won't.