How bedroom and bathroom comp adjustments work

A sold comp is adjusted before it enters the weighted median, so a 2-bedroom sale can be compared with a 3-bedroom subject. This page multiplies that rule out on invented sold prices. The dollars are a worksheet. They are not a closed sale and not a listing. The weight table that consumes the adjusted price is on how to pull comps. Nothing here is uploaded.

The rate comes from the comps. The subject's bedroom count is not an input to the rate. It is used later, when one sold price is moved up or down. Two rates are stored: dollars per bedroom, and dollars per bathroom. The comps screen prints the pair-derived rates as regression and the percent rates as heuristic.

One pair, and the two gates

Start with comp A and comp B. A has 3 bedrooms, 2 bathrooms, 1,400 square feet, was built in 1995, and sold for $180,000. B has 4 bedrooms, 2 bathrooms, 1,500 square feet, was built in 2000, and sold for $210,000.

The square-footage gate divides the smaller living area by the larger one. 1,400 / 1,500 = 0.9333. The pair is kept when that ratio is at least 0.80, so A and B pass. The age gate subtracts the years. 2000 − 1995 = 5. A gap of 10 years is kept. A gap greater than 10 is dropped. Five years passes. Bathrooms match at 2, and bedrooms differ, so this is a bedroom pair. The pair rate is (180,000 − 210,000) / (3 − 4) = $30,000.

One pair does not set the stored rate. The pair path needs at least two bedroom pairs and at least two bathroom pairs. A and B are the first bedroom pair only. The rest of the set is what makes a median possible. These are the other comps, with the same invented prices:

• C: 2 bedrooms, 2 bathrooms, 1,300 square feet, built 1998, sold for $155,000.
• D: 3 bedrooms, 1 bathroom, 1,450 square feet, built 1996, sold for $165,000.
• E: 3 bedrooms, 3 bathrooms, 1,520 square feet, built 2001, sold for $200,000.
• F: 4 bedrooms, 2 bathrooms, 1,000 square feet, built 1997, sold for $140,000.
• G: 4 bedrooms, 2 bathrooms, 1,420 square feet, built 1980, sold for $250,000.

F against A shows the square-footage gate closing. 1,000 / 1,400 = 0.7143, which is under 0.80, so the pair is dropped before the year is read. The two-year age gap never gets a vote. G against A shows the age gate closing on a pair that already cleared size. 1,400 / 1,420 = 0.9859, and 1995 to 1980 is 15 years. Fifteen is greater than 10, so G contributes no rate. F fails the size test against A through E and against G. Against F, G is dropped on size first: 1,000 / 1,420 = 0.7042. G fails the age test against A through E.

The edges are exact. 1,200 and 1,500 square feet give 1,200 / 1,500 = 0.80, and that pair is kept. 1,199 and 1,500 give 0.7993, and that pair is dropped. A year gap of 10 is kept. A 1,400 square foot house from 1990 and a 1,500 square foot house from 2001 have a size ratio of 0.9333 and a gap of 11 years, so the age gate drops them. A living area of 0 or below drops the pair before the ratio is computed. A year stored as 0 or below skips the age test. The other comp can be from 1970 and the pair can still count, as long as the size ratio is at least 0.80 and one feature is isolated.

The median of the pairs that qualify

A bedroom pair has different bedroom counts and the same bathroom count. A bathroom pair has different bathroom counts and the same bedroom count. If both counts differ, the pair is unused even when it clears both gates. B and D are an example: 1,450 / 1,500 = 0.9667 and the years differ by 4, and the pair still adds nothing, because the bedrooms differ and the bathrooms differ.

The three bedroom pairs in A through E are:

• A and B: $30,000, from the division above. Size ratio 0.9333, year gap 5.
• A and C: (180,000 − 155,000) / (3 − 2) = $25,000. Size ratio 1,300 / 1,400 = 0.9286. Year gap 3.
• B and C: (210,000 − 155,000) / (4 − 2) = $27,500. Size ratio 1,300 / 1,500 = 0.8667. Year gap 2.

Sort those rates: $25,000, $27,500, $30,000. With an odd count, the median is the middle value, $27,500. The absolute value of a positive median is the same number. $27,500 sits between the bedroom floor of $5,000 and the bedroom cap of $50,000, so the clamp leaves it. Rounding to the nearest dollar leaves $27,500. That is the per-bedroom rate, and the report labels it regression.

The three bathroom pairs are:

• A and D: (180,000 − 165,000) / (2 − 1) = $15,000. Size ratio 1,400 / 1,450 = 0.9655. Year gap 1.
• A and E: (180,000 − 200,000) / (2 − 3) = $20,000. Size ratio 1,400 / 1,520 = 0.9211. Year gap 6.
• D and E: (165,000 − 200,000) / (1 − 3) = $17,500. Size ratio 1,450 / 1,520 = 0.9539. Year gap 5.

Sorted, those are $15,000, $17,500, $20,000. The middle is $17,500. It sits between the bathroom floor of $2,500 and the bathroom cap of $30,000. The per-bathroom rate is $17,500. An even count of rates would average the two middle values instead of picking one. That average shows up on the fallback set below, where four sold prices produce the median.

Where the clamp cuts a large pair rate

The first set never touches a cap. This second set does. Every pair below clears 0.80 on size and a year gap of 10 or less. The comps are H through L.

• H: 3 bedrooms, 2 bathrooms, 1,500 square feet, built 2000, sold for $200,000.
• I: 4 bedrooms, 2 bathrooms, 1,550 square feet, built 2002, sold for $260,000.
• J: 2 bedrooms, 2 bathrooms, 1,480 square feet, built 1999, sold for $120,000.
• K: 3 bedrooms, 1 bathroom, 1,520 square feet, built 2001, sold for $160,000.
• L: 3 bedrooms, 3 bathrooms, 1,580 square feet, built 2003, sold for $236,000.

• H and I: (200,000 − 260,000) / (3 − 4) = $60,000 per bedroom.
• H and J: (200,000 − 120,000) / (3 − 2) = $80,000 per bedroom.
• I and J: (260,000 − 120,000) / (4 − 2) = $70,000 per bedroom.
• H and K: (200,000 − 160,000) / (2 − 1) = $40,000 per bathroom.
• H and L: (200,000 − 236,000) / (2 − 3) = $36,000 per bathroom.
• K and L: (160,000 − 236,000) / (1 − 3) = $38,000 per bathroom.

The bedroom median is the middle of $60,000, $70,000, and $80,000, which is $70,000. The bedroom cap is $50,000, so the stored bedroom rate is $50,000. The bathroom median is the middle of $36,000, $38,000, and $40,000, which is $38,000. The bathroom cap is $30,000, so the stored bathroom rate is $30,000. The same function raises a low median. A bedroom median of $3,500 becomes $5,000. A bathroom median of $1,500 becomes $2,500. The absolute value is taken before that clamp, and the dollar round is taken after it.

The 3 percent and 1.5 percent fallback

If the bedroom pairs are fewer than two, or the bathroom pairs are fewer than two, both stored rates leave the pair path. A usable bedroom median is discarded together with the short bathroom side. Comps M through P show that. Each qualifying pair clears both gates.

• M: 3 bedrooms, 2 bathrooms, 1,500 square feet, built 2000, sold for $180,000.
• N: 4 bedrooms, 2 bathrooms, 1,600 square feet, built 2005, sold for $220,000.
• O: 2 bedrooms, 2 bathrooms, 1,450 square feet, built 2001, sold for $150,000.
• P: 3 bedrooms, 1 bathroom, 1,520 square feet, built 2003, sold for $165,000.

• M and N: (180,000 − 220,000) / (3 − 4) = $40,000 per bedroom.
• M and O: (180,000 − 150,000) / (3 − 2) = $30,000 per bedroom.
• N and O: (220,000 − 150,000) / (4 − 2) = $35,000 per bedroom.
• M and P: (180,000 − 165,000) / (2 − 1) = $15,000 per bathroom. This is the only bathroom pair.

Three bedroom rates would have a median of $35,000. One bathroom rate is not enough, so that $35,000 is not stored, and neither is the $15,000. The percent path uses the median sold price of every comp passed in. A comp that failed a gate is still in that median. These four each formed a pair, and the same rule uses all four prices. Sorted, the sold prices are $150,000, $165,000, $180,000, and $220,000. An even count averages the two middle values: (165,000 + 180,000) / 2 = $172,500.

Three percent of $172,500 is $5,175. That sits inside $5,000 to $50,000, so the bedroom rate is $5,175. The report labels it heuristic. One and a half percent of $172,500 is $2,587.50. A half dollar rounds up, so the bathroom rate is $2,588. The percent is of this median sold price. It is not 3 percent of an after-repair value you hope to get.

The same clamps wrap the percent. A median sold price of $100,000, from $80,000, $100,000, and $120,000, gives 3 percent = $3,000 and 1.5 percent = $1,500. The floors raise those to $5,000 and $2,500. A median sold price of $2,400,000, from $2,200,000, $2,400,000, and $2,600,000, gives 3 percent = $72,000 and 1.5 percent = $36,000. The caps cut those to $50,000 and $30,000.

A negative pair rate is stored as a positive number

Sometimes the extra bedroom sold for less. The median of the pair rates can come out negative. The absolute value flips it before the clamp. Comps Q through U all clear both gates, and both features have at least two pairs, so the pair path is the one that runs.

• Q: 3 bedrooms, 2 bathrooms, 1,500 square feet, built 2000, sold for $200,000.
• R: 4 bedrooms, 2 bathrooms, 1,550 square feet, built 2002, sold for $160,000.
• S: 2 bedrooms, 2 bathrooms, 1,480 square feet, built 1999, sold for $220,000.
• T: 3 bedrooms, 1 bathroom, 1,520 square feet, built 2001, sold for $185,000.
• U: 3 bedrooms, 3 bathrooms, 1,580 square feet, built 2003, sold for $230,000.

• Q and R: (200,000 − 160,000) / (3 − 4) = −$40,000 per bedroom.
• Q and S: (200,000 − 220,000) / (3 − 2) = −$20,000 per bedroom.
• R and S: (160,000 − 220,000) / (4 − 2) = −$30,000 per bedroom.
• Q and T: (200,000 − 185,000) / (2 − 1) = $15,000 per bathroom.
• Q and U: (200,000 − 230,000) / (2 − 3) = $30,000 per bathroom.
• T and U: (185,000 − 230,000) / (1 − 3) = $22,500 per bathroom.

The bedroom median is the middle of −$40,000, −$30,000, and −$20,000, which is −$30,000. The absolute value is $30,000. The clamp leaves $30,000 in place. The bathroom median is $22,500, inside $2,500 to $30,000. The direction of a later adjustment does not come from this negative median. It comes from the bedroom count on the comp you are adjusting.

The sign of the adjustment

Use the first set's rates, $27,500 per bedroom and $17,500 per bathroom. The subject has 3 bedrooms and 2 bathrooms. The bedroom line is minus (comp bedrooms minus subject bedrooms) times $27,500. The bathroom line has the same shape. Each line is rounded to the nearest dollar. The adjusted price rounds the sold price plus the unrounded total. In the three comps below every product is already a whole dollar, so the round does not move either figure.

• A comp with 2 bedrooms and 1 bathroom sold for $148,000. Bedrooms: −(2 − 3) × 27,500 = $27,500. Bathrooms: −(1 − 2) × 17,500 = $17,500. The total is $45,000. The adjusted price is $148,000 + $45,000 = $193,000.
• A comp with 4 bedrooms and 3 bathrooms sold for $240,000. Bedrooms: −(4 − 3) × 27,500 = −$27,500. Bathrooms: −(3 − 2) × 17,500 = −$17,500. The total is −$45,000. The adjusted price is $240,000 − $45,000 = $195,000.
• A comp with 3 bedrooms and 2 bathrooms sold for $176,000. Both gaps are zero, so both lines are $0. The adjusted price stays $176,000.

Fewer bedrooms than the subject produce a positive dollar adjustment. The comp would have sold for more if it had matched. More bedrooms produce a negative adjustment. Matching counts leave the sold price where it is. Square footage and year built do not add a third line here. They only decide which pairs were allowed to create the rate.

Do not haircut the same bedroom gap again after this step. Condition, a busy road, and a finished basement are outside this adjustment. The adjusted price is what the weighted median on the comps page ranks. It is not yet an offer. Once you trust that median enough to type it in, the MAO calculator turns it into a purchase price, and the flip profit worksheet subtracts rehab, closing, and holding from the resale.

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