How to Adjust Comparables

[Brett Peters]

When adjusting comparables, how do you determine the value of amenities relative to the increase in value of the home? In other words, how do you know an extra bathroom adds $500 in value? Or a let's say a garage adds $10,000? Is there any real way to calculate these differences or is this strictly art?

[Philip Lassman]

There are a few ways in which you can get a value factor for each of the amenities or features a home has or doesn't have.  One is to look at the sold or asking prices of similar homes in similar condition in the target neighborhood.  A realtor will also often know what value to attribute to a feature or bedroom.  Keep in mind that some features or amenities will have zero or even lower the value depending on what part of the country you live in, or the general sentiment about certain features that are less desirable given current market trends.  As an example, a swimming pool may be a huge plus in many southern areas like Texas or Arizona, but in colder northern climates less so.  The reason is availability of use, maintenance costs or lifestyle needs.  It really is part art and part science.  Other ways to do it is look at what the cost of adding an extra bedroom might be by converting or renovating part of the home or removing closets that are not functional to make the space more efficient and functional.  You have to realize that a $1 spent may yield a lot less than a $1 of added value so choose renos wisely.