appraising a single-family residence located in the Huntington neighborhood
You are appraising a single-family residence located in the Huntington neighborhood. The property is being acquired by a mortgage applicant and you have been asked to appraise the property by the lender. Seven potential comparable sales were initially identified. For the purposes of this exercise, we will only focus on one comp–but please remember that an actual appraisal will typically contain at least 3 comps.
No adjustments for transaction characteristics are necessary, but you will need to make a number of adjustments for property characteristics, which are described below and also on the attached spreadsheet.
The subject property is located in Huntington. It has typical construction quality and average condition. It is a 3-bedroom, 3-bathroom home with 3,750 square feet of living space on a 6,625 square foot lot. It was built 4 years ago. It includes a 2-car garage, a covered porch, and a wood deck.
The comparable sale is located in Kensington and recently sold for $515,000. It has typical construction quality and average condition. It is a 3-bedroom, 2.5-bathroom home with 3,825 square foot of living space on a 6,550 square foot lot. It was also built 4 years ago. It includes a 2-car garage, a covered porch, and a swimming pool.
The subject property and the comparable are located near each other, but the comp is considered to be in a slightly more desirable location. Homes in this location generally sell for a 1% premium over the subject property. Since the comp sold at a premium, you will make a downward adjustment to the comp to make its sale price more like what you would expect for the subject property.
The incremental adjustment for the size of lot is $25 per square foot and the incremental adjustment for the size of living area is $30 per square foot. (hint: compare the lot size of the subject to the lot size of the comp and then adjust price for that difference)
Each year of effective age reduces the value of properties in this market by $1,000 per year. Your experience suggests that bedrooms are worth $15,000; each full bath is worth $8,000 and each additional half-bath is worth $4,000. Additional garage spaces are $9,000, wood decks are $3,000 and pools in these neighborhoods are worth $15,000, respectively. No significant non-realty items were included in the comparable transactions.
Based on these assumptions and the property descriptions below, what is the final adjusted sale price for the comparable property? Fill in the attached grid (spreadsheet), showing how you did your calculations. For example, if there is an adjustment per square foot, show the dollar per square foot times the square feet in that cell. Some of the cells have been calculated for you, so you can see how to make formulas in excel. Note that some of the characteristics of the comparable property are identical to the subject, so the adjustment will be zero. Complete the spreadsheet and upload it to the Submission folder.