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How Much is a Second Bathroom Worth?

second-bathroom-worthAs Austin real estate appraisers we are often asked, “How do appraisers value a second bathroom?” or “How much value would it add to my home if I added a second bathroom?”. Well, that depends on your immediate market area and how much buyers are PAYING there for a home with two bathrooms.

And how exactly do we figure that out? The answer is simple: Paired Sales Analysis. This is the same method we use to determine value for any feature of real estate. I know, it sounds like a scary scientific term but the process is really quite simple. The appraiser will find a group of similar property sales where the only difference is the feature we are trying to value; the difference in value between the groups (pairs) is considered to be the value of the feature.

For example, assume we have a 2000 sqft home of average quality and in good condition that has an in-ground pool. To extrapolate the value of the pool we would look for 3 or more homes that have recently sold that are similar to this one, some with pools, some without. After making any necessary adjustments for minor differences between the homes, the remaining difference in value would be the market value of the pool.

Let’s see how this works in a real world scenario. We want to know how much a second bathroom is worth in the Crestview neighborhood. The first thing I will do is run a search for all sales in Crestview, having only one bathroom, transpiring over the past 12 months. I see that the median and average sales prices look like this:

Crestview 1 Bathroom

Now we run the same search but for homes that had exactly two bathrooms. This time our results look like this:

Crestview 2 Baths

Using these results, it seems clear that a second bathroom adds $45,500 on the median ($355,500 – $310,000) and $19,500 on the average ($343,525 – $324,011). But wait a minute… look at the price per square foot values. There’s something odd there. Homes with two bathrooms appear to be selling for less per square foot on average and for just slightly more on the median than 1 baths. You’ll also notice that the two bath homes are larger in size than the 1 baths as well – and now we understand the discrepancy. It isn’t that homes with two bathrooms are selling for $45k more, but rather, homes with two bathrooms are usually larger in this market area!

Makes sense. But does this mean the 2nd bathroom has no value? At this point we’re not sure, we need to dig deeper.

To determine actual value for the additional bathroom we need to:

  • Subtract the difference of the square footage from the two groups
  • Multiply that difference by an average cost to build (~$150)
  • Add that cost to the 1st group’s median value
  • Subtract the resulting value from the median of group 2
  • Now we have a realistic value for the additional bathroom

Let’s do the math using the median values:

1,298sqft – 1150sqft = 148sqft x $150 = $22,200 + $307,500 = $329,700

$345,000 – $329,700 = $15,300 for the additional bath

Whew! And that was the work required for just ONE feature of the property.

I hope this article has been informative and shed some light on just how we appraisers calculate adjustments for appraisal assignments. Many times we are accused of making arbitrary adjustments but in fact, it’s just math!

 

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Austin neighborhoods we appraise

We provide real estate appraisals and related services to the following cities, towns and communities across the Austin metro area. We cover a large portion of Central Texas - if you don't see your area below, please call to confirm with one of our friendly staff.

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Anderson Mill | Bee Cave | Briafclif | Brushy Creek | Buda | Cedar Park | Creedmoor | Del Valle | Elgin | Georgetown | Hays | Hutto | Jollyville |
Jonestown | Kyle | Lago Vista | Lakeway | Leander | Manor | Mustang Ridge | Pflugerville | Point Venture | Rollingwood | Round Rock |
San Leanna | Shady Hollow | Sunset Valley | Webberville | Wells Branch | West Lake Hills

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Real Estate Appraisals Austin
4.8
Based on 45 reviews
Ed came out on short notice to measure a new home I was in the process of purchasing. He was professional and honest in his work. I found him online and it was not through my lender. I wanted an independent appraiser since the lender was connected to my builder. Definitely will use him again if I ever needed to. I was a first time home buyer and he was fair to me and helpful. Thank Ed!
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Jennifer Nguyen
The realtor that came out was very professional and thorough. I would recommend this service.
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This company is contracted to my mortgage company for market appraisals to remove PMI. They contacted me right away and had the whole thing turned around in less than a week. Appreciate the speed and the quality of the service and would definitely recommend.
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Jeanna Kozak
I was able to schedule an appraisal just two days after contacting the company. Likely this was a fluke, but it worked well for me! Our appraiser was a bit late, but that was the fault of the previous appointment. Once he arrived, he listened to everything we pointed out. Our appraisal was fair for our neighborhood we thought and the report arrived about 8 days after the appointment. We are happy and will recommend Real Estate Appraisals Austin to any others we know.
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We used Real Estate Appraisals Austin and found them to be very professional, accommodating and efficient. Their work product was thorough and very well presented. We would definitely recommend them and would use them again.
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