How to calculate for adjustments

3 Replies

Hello BP family,

When you're doing comps, how do you calculate for adjustments? E.g. let's say some of the properties have an extra bedroom/bathroom, finished basement, newer/older homes, etc.

Thanks!

Ty

Comps shouldn't be that detailed in my personal experience (if you take it to that level you may easily miss opportunities). Just compare it to something that has the same basic attributes but then just be careful about building that was done outside of code. A 3 bedroom is still a 3 bedroom even if that last bedroom was added on later. 

@Brendon C. Thanks Brendon. Why do you say comps shouldn't be that detailed? 

I'm asking because I'm looking at an example through a Wholesaling course and the example the guy gives makes an adjustment based on the comps having a one full bathroom more than the property as well as being built 15-20 years after. The adjustments was a $20k swing bringing the ARV from $310k to $290k. Unfortunately, he didn't breakdown how he came up with that number so I'm just curious if there is some baseline pricing to adjust for extra amenities or features?

Depending on which region, you're probably going to have appraisers that look at dollars per square feet averages and then adjusting numbers based on red flags that are far outside the norm for the area you're coming in. Pricing out comps is way less of a science than you might expect. However, appraisal courses are generally worth their weight in gold. There are a couple of different ways to do it and even if it's not really a science, those ways are really what you want to focus on. I know you can get all the appraisal classes you'd ever need for like 1400 in my area.