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How do you use a residential room count adjustment, or have you?

By
Commercial Real Estate Agent with Jirasek Realty, LLC 361266

Differences in square footages are already adjusted in sf adjustment, differences in baths are adjusted elsewhere, etc. So, do you use a room count for a small seperate laundry room, second living area, or just differences in bedroom count? I'm curious, do any of you ever use a room count adjustment? If so, how do you justify, and support the adjustment amount, and where do you get the contributory difference amount? It appears this may be used differently, or not used at all, in different markets. I am just trying to get a feel for different opinions, or have you had any issues with it with an underwriter/lender? 

Posted by

 

David Jirasek, ALC, CCIM

Accredited Land Consultant - Certified Commercial Investment Member

JIRASEK REALTY - (254) 770-0996  -  www.jirasekrealty.com  -  djirasek@ccim.net

Paul Durry
Collateral Specialist Inc - Lawton, OK
Former Broker Associate, CDPE, CIAS, CHMS

I do an adjustment for room counts,most often for the 2nd living area if present. I also see some only count the bed/baths in the room count.

Nov 10, 2009 09:47 AM
Matt Kofsky
Transaction Realty 500 Reno, Nv. - Reno, NV

The way you do the adjustment for room count is look at the comps.  Lets say there are 3 bedroom homes and 4 bedroom homes that are 1500 sq ft.  Is there a price difference generally?  Do the 4 bedrooms sell on average for more than the 3 bedrooms?  If so, you make an adjustment.  

Nov 13, 2009 02:27 AM
David Jirasek
Jirasek Realty, LLC - Temple, TX
ALC, CCIM

Buyers have different tastes, and desires. Some prefer an extra room but smaller room sizes in the same SF, other may prefer more open rooms that their furniture will fit better in. As with anything, there are different opinions on how or why to adjust, and how do you really prove it. In the real world, for every matched pair analysis, if you keep digging for more comps, you can prove another outcome, as for time, motivation, location, 2nd LA, 4th bedroom, study, etc, etc, etc. Maybe the sale comp was skewed for as simple a reason as the seller wanted out. Not every sale in MLS is useable, and sometimes all the data may not be correct, or concession comments noted in MLS, etc. I asked some other local appraisers in my city, and found they do not use room count either, as the difference in the size is already adjusted in the SF size adjustment, otherwise, it could be argued that it is double dipping. Thank you Paul, and Matt, for your comments. I invite more comments on this subject!

Nov 19, 2009 09:24 PM
Rosemary Brooks
BMC Real Estate - 209-910-3706 - Stockton, CA
The Mother & Daughter Realty Team

I have always compared it within 20% of living area sq footage and have not used the room count as a basis. Room count, to me, includes all rooms except bathrooms.  And I know others do not count the kitchen.

Nov 20, 2009 01:25 AM
David Jirasek
Jirasek Realty, LLC - Temple, TX
ALC, CCIM

Rosemary, in our market it seems most are counting bedrooms, living room(s), kitchen, formal dining, and any other room(s) other than closets. If a Realtor inputs the laundry room to be a seperate room, and you are using that data as a sale, then it is added as another room in the count. What is odd, is if the washer/dryer is in a closet then it is not, but some "seperate" laundry rooms aren't much bigger than a closet anyway. That is why I do not think the room count adjustment, in most casis, is a valid adjustment since the square footage adjustment would already be addressed. Thank you again for your view on it. I'm curious why some people in your community do not count the kitchen. ? 

Nov 20, 2009 10:06 PM
Tiffany Burke
Group one real estate - Corpus Christi, TX

I've wondered this myself. however; I have never added value for number of room counts.   I have always made the adjustments based on square foot and never had any problems with doing it this way.

Feb 11, 2010 08:16 AM
Anjima V . Kumar
Accentia Technologies - Hialeah, FL

Most of the Banks ask fro SF adjustments, but in some markets room count adjustments are very relevant. In CA they asks from bed n bath adjustments which we do depends onthe market value, for eg: Areas with home values of 50K-500K, for Bedroom : at $5,000(-/+) and Bathroom: at $10,000 (-/+)

Thanks

Anjima V Kumar

Business Development & Support Team (BPO)

Software Incubator Inc.

516-858-0188

Email: anjima@softincubator.com

Chat: incma01@hotmail.com

Site: http://www.softincubator.com/bpo/index.html

Feb 21, 2010 05:32 PM
The Jefferson Team
HomeSmart Optima Realty - Oakley, CA
Exclusive Listing Agents

I have never adjusted the room count...only the bedrooms, bathrooms and square footage. I will also adjust for lot size, if necessary. Too many adjustments may be a reason for qc to reject your bpo and request comps that are closer to the subject's criteria.

Crystal

Mar 19, 2010 05:10 AM