You are trying to estimate the value of a property that you are interested in buying. The subject property is located at 322 Rock Creek Road in a new suburb of a large metropolitan area. The property is like many others in the area, with three bedrooms, two baths, a living room, a den, a large kitchen, and a two-car garage. The residence has about 1,800 square feet of air-conditioned space and is of traditional design. The property is located on an interior lot with no potential flooding problems. The quality of construction appears to be about average for the market area.

Comparable properties in the area have the following characteristics:

You have come to some conclusions concerning what you believe the different attributes of the comparable properties are likely to be worth in the market area. Appreciation in house values in the area has been very low over the past eight months, and you think that any properties that have sold within that period would probably not require any adjustments for the time of sale. However, one of the comparable properties sold over a year ago, and you think it will require a $1,500 upward adjustment. You also believe that properties in the area that are located near the creek sell for about $1,200 less than other properties in the area because of a slower rate of runoff after heavy rains. Properties on corner lots generally sell for a premium of about $1,000. Houses with the fashionable modern design usually bring about $1,000 more than those that have traditional design characteristics. Because three-bedroom homes are considered desirable by buyers in the area, an additional fourth bedroom will generally only add about $1,200 in value to a property. However, properties that contain only two bedrooms are rather difficult to sell, and often bring $2,000 less than their three-bedroom counterparts when they are sold. Most homes in the area have a two-car garage, but when properties have a one-car garage, they usually sell for about $800 less. A two-car open carport generally reduces the value of the property by a similar amount, or $800. The inferior construction quality exhibited by comparable III should reduce its value by about $1,500.

a. You plan to complete the sales comparison approach to value and assign an estimate of value to the subject property. Give specific reasons for your choice of value.

b. Assume that the value of the lot the subject property is constructed on is $13,000. Airconditioned space in the dwelling would cost about $36.00 per square foot to reproduce, and the garage would cost approximately $3,700 to reproduce. Complete the cost approach to value, assuming that, because the property is new, no depreciation of the structure is required.

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Comparable I 123 Clay St. Comparable II 301 Cherry Lane Comparable II Address Sale price Time of sale Design Parking Location Drainage Bedrooms Baths Construction 119 Avenue X $75,000 13 months ago Traditional 1-car garage Interior lot Good Two Two Below average $85,000 6 months ago $79,000 7 months ago Traditional 2-car carport Interior lot Below average Modern 2-car garage Corner lot Good Four Two Average Three Two Average