It's a single family house, I can either just do cosmetics or I'm thinking about extending the house because it's very small compared to the lot size.

Select nearby recent sales of similar size lots, square feet of the home, number of bedrooms/baths, etc.

But then you'll have lenders that won't touch you because you loan size is small and they make no money off you. 

It has been on the market for two years, in a great neighborhood, and checks all the right boxes on size and bedrooms.  

In general I agree that it is nice to meet people and have a chance to size them up.

you gotta tell us size, price, location, zoning, all that good noise

See what you can do to manage an additional bath of any size.

A property that size would take me about half as much in the DC area.

We are able to consistently place good quality tenants with rents from 850-1200+ (depending on size and area) that stay for multiple years. 

I used comps with similar size sqft, same # bedrooms/baths, same neighborhood. updated comps are 40k-50k more than the seller is looking for. comps are in the 220-230 range, seller is asking for 170. lets assume an AMV of 225.