Sometimes the Best way to learn is by doing- lets try a live example:
The subject property is a 3 bedroom 2 bath 1,500 sqft California Bungalow, built in 1940, that has had some recent updating (copper plumbing, electrical, new roof, kitchen remodeled 10 years ago) on a 6,000 sqft lot in the Hancock Park/Larchmont Village neighborhood. How much is it worth?
When we searched the sales for the neighborhood we found three similar sales:
3 Br 1.5 bath California Bungalow, built in the 1940’s, clean condition, on a slightly larger lot of 7,500 sqft and a pool. This property sold for $825,000 four months ago
Cape Cod, 3Br 1 Ba 1,300 sqft, much smaller lot- 4,500 sqft, just down the street from subject property, but it was a foreclosure sale and in bad condition. This property sold a year ago for $575,000
4 Br 3 Ba completely remodeled Larchmont Village house, 2,400 sqft and two stories. Sold two weeks ago for $1,180,000
Based on this information what do you think the subject property is worth?
With the above example, it looks to me like COMP #1 is the best comp to the subject property. We can also determine from Comp #2 and Comp #3 a price range for homes in the area. It looks like the fixer market is hovering around the $600’s and the ‘big house’ market is close to $1.2M. Our subject property does not have a pool. A standard Pools costs around ~$40,000- so that is a big plus that COMP #1 has over our subject property. However Subject property has a full second bath instead of a powder. Big difference is the lot- at 1,500 sqft larger in lot that can be a $40,000 – $60,000 difference in price. I’d say that the market value of the Subject property in my example would be worth $770,000 – $790,000.