How would you come up with a market value/price PSF for a large 1BR coop with a huge terrace, with no recent sales in the building?

Asked by Elena Ravich, Esq., New York City, NY Sun Jan 20, 2013

and practically no similar sales in the area. It is a very unique unit because of the 1700 SF terrace. I thought of evaluating the unit as if it had no outdoor based on the comparable without any terraces, and then adding 1/3 of that price PSF multiplied by the size of the terrace - does it sound right?

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Joseph Hasti…, , 11373
Sun Jan 20, 2013
Hi Elena. Tricky stuff to be sure. Here's a response from Jonathan Miller to one of our Associate Brokers regarding Terrace valuation. I hope it helps.

"We like to use a ppsf analysis on finished terrace area valuation.

Look at what the ppsf of the property would be without the terrace – we often see finished terrace space worth 25-50% of the ppsf of the interior space.

For example - if the interior space was worth $1,000 psf, without considering the terrace, the outdoor space could be worth as much as $500 psf (50% of interior ppsf). If the terrace is 500 sqft, the terrace could be worth $250k ($500/sf x 500 sq ft).

That’s the basic idea. Of course there are many other factors such as:

-utility of the space – 500 sq ft could be a deep terrace or a shallow 2 ft deep wrap around – same sq ft but different value.
-oversized space – if the terrace is greater than 50% of the interior space, the ppsf contribution falls off considerably for the additional space over the 50% threshold.

Its important to note that these are only rules of thumb to guide you – the value of a terrace is not formula driven – these relationships are developed from market data.

Jonathan J. Miller, CRP

Real Estate Appraisers & Consultants"
0 votes
Adam Hignite, , New York, NY
Sun Jan 20, 2013
That's a difficult question. Some people say to use 1/3 and others say a 1/2 of the interior PSF. In this case, since the terrace is so large, I think I would go with 1/3.
1 vote
Elena Ravich,…, Agent, New York City, NY
Tue Jul 23, 2013
Thank you very much for your insightful comments
0 votes
Irina Karan, Agent, Aventura, FL
Thu Jun 13, 2013
Just a thought - maybe using other buildings to get the "percentage" to living area (value of the terrace vs. value of the unit)...with adjustments for desirability of each building?

Also, the ability to use/attract - as outdoor space, we can add more value if the space is "cool" and practical to use.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
0 votes
Fern Hamberg…, Agent, New York, NY
Sat Jun 8, 2013
Hello Elena,
The 1700 SQft says a lot about the unit. It says that you will be using the outdoor space at least when it is comfortable outside. Usually when it is such a huge space, appraisers count as much as 50% of the sale price per foot for the indoor space. The market is so hot, even with recent sales in the building, the price tend to be on rise and you should add a percentage up from the asking price. How many of us, sold at asking and above asking lately... So moral of the story, you should take the closest 3 buildings with similar amenities for now and add a few dollars because of the market and add the 50% for the terrace.
Good Luck.
Fern Hamberger
0 votes
Daniel Geller, Agent, New York, NY
Mon Jan 21, 2013
There is a simple formula to figure out the worth of an apartment with a terrace. First, figure out the value per square foot of the interior space. Then, take the square footage of the terrace, divide by 2, and then multiple by the cost per square foot of interior space.

Example: let's say you have a 1,000sf apt with a 200sf terrace
The interior space is worth $1,000/sf
Therefore, the interior space is worth $1,000,000
The terrace is worth $100,000
Total value: $1,100,000

In other words, the value of the terrace per sf is worth half the value of the interior space per sf.

If you don't have any recent comps for a one bedroom vs. another one bedroom within the same building, take the most recent 5 sales withing the building (assuming they occurred within the past 12-18 months) and figure out the average price per square foot and apply the results to your listing. Of course you should use your knowledge and skill to take into account other factors such as renovations, views, etc. and factor that into the price. Good luck.

Dan Geller
Geller Group
Keller Williams NYC
0 votes
Elena Ravich,…, Agent, New York City, NY
Sun Jan 20, 2013
Great answers, thank you everybody! I am glad we are on the same page. As I mentioned, in the qn, it is even more complicated than figuring a separate value of a terrace - there are no current similar sales in the building at all - it is a 900 SF 1 BR/ 1.5BA and the only sale in the building was a studio sold 8 months ago of unknown size....I guess, I will just have to find similar pre-war coops with a similar number of units and amenities within1/2 radius to come up with a price per SF to be used for the interior space.
0 votes
Yanoska Diaz, Agent, Miami, FL
Sun Jan 20, 2013
You should search for the last sale in the building. If sale occurred within the time values have been stable (past 12 - 18 months) then you should take sale into consideration.
0 votes
Arthur Golden, Agent, New York, NY
Sun Jan 20, 2013
Find similar units anywhere. Let's say $100.
Find similar units in that same building/area $75 that are similar to other units in your subject building. $60.
Calculate the ratio and differential and you have a number. In this case, there's a 33% increase making your apartment $80 vs the base comp $60 apartment.

Repeat a few times, see if the ratios in different buildings hold up and you have a solid number.
Use your expertise to add/subtract to the comp.


Arthur "Ungie" Golden
Douglas Elliman | 1995 Broadway, 4th Fl | New York, NY 10023
C: 212.866.8717 | P: 212.712.6078 | F: 646.497.5476 | E:
Commercial/Residential Sales and Leasing Services
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