Commentary
October 30, 2026
By Steve Segretta
Valuing a Brooklyn townhouse can look deceptively simple.
Find a handful of recent sales nearby, compare their square footage and condition, calculate a price per square foot, make a few adjustments, and arrive at a value.
Sometimes that works reasonably well. But townhouses aren't standardized assets, and seemingly small differences between properties can have an outsized impact on value.
This came up recently when analyzing a townhouse for buyers in Gowanus.
The house had a lot going for it: approximately 20 feet of width, a 20-by-100-foot lot, four bedrooms, outdoor space and an asking price below $2 million. For buyers looking for a single-family townhouse within easy reach of Park Slope, it represented a relatively scarce opportunity.
But determining what it was actually worth required going considerably deeper than the asking price and the closest comparable sales.
The first question: Which properties are actually comparable?
There were numerous townhouse sales in the surrounding area.
The problem was that many of the seemingly obvious comps weren't necessarily the best ones.
The subject property was located in an M2-1 manufacturing district. Many nearby townhouses were located in R6B residential zoning.
That distinction matters.
An existing residence in a manufacturing district may represent a longstanding lawful use, but residential use and future alterations can raise very different questions than they would for a comparable house in a residential district.
So rather than simply drawing a radius around the property and selecting the closest sales, I separated the analysis into two groups.
The first consisted of townhouses sharing the property's M2-1 zoning. These became the primary valuation set.
Nearby residentially zoned townhouses were still useful, but more as a secondary check on the broader townhouse market.
That relatively simple change materially improved the analysis.
Two sales helped establish the range
One particularly useful comparable had sold recently in the mid $1.8 million range.
It was larger and wider than the subject property and had benefited from meaningful renovation. On those characteristics alone, you might expect it to be worth more.
Another townhouse on the same block as the subject had sold for in the mid $2 million range.
At first glance, that sale might suggest considerably more upside. But a closer look showed that it was substantially superior in renovation and overall condition, with features that made it much more of a finished, move-in-ready property.
Those two sales became useful bookends.
The lesson wasn't just how the subject property should be priced relative to them. It was also understanding why buyers had paid those prices and how those differences applied to the house we were evaluating.
Why price per square foot wasn't enough
Price per square foot is useful, but with townhouses I rarely view it as the answer.
Consider two houses with similar reported square footage.
One may be 20 feet wide and another 15 feet wide. One may have three highly usable floors while another includes space of substantially lower utility. One may have a renovated kitchen, central air and updated mechanicals; another may require significant work.
Outdoor space, ceiling height, light, original detail, floor-plan efficiency, legal configuration and even where the staircase sits can affect how buyers perceive essentially the same amount of square footage.
And reported townhouse square footage itself isn't always as consistent as buyers might assume.
In this case, the subject property's approximately 20-foot width and four-bedroom configuration were meaningful positives. Its average condition and need for additional updating worked in the opposite direction.
A simple neighborhood average price per square foot wouldn't adequately capture either.
Then there were the things that didn't fit neatly into a spreadsheet
The property included a detached structure in the rear yard that was being used as a studio.
That's an attractive feature. A separate studio could have real utility to a buyer looking for a home office, creative space or simply additional usable area.
But research into the property records didn't establish that the structure had been formally approved.
The seller indicated that it had existed before the seller acquired the property, and an older survey reportedly showed the structure. That was useful information, but a survey establishes physical existence, not necessarily legal status. Additionally, it was wired for electricity, but no permits were ever filed.
So how much value should a buyer assign to the studio?
My thought was: not much until its status could be better established.
That doesn't mean the structure has no practical value, nor does it necessarily mean it represents a serious problem. It means a buyer shouldn't pay a substantial premium for something whose legal status remains uncertain.
That's an important distinction in townhouse valuation.
Buildable square footage can be misleading too
Property records also suggested that the lot had significant unused floor area.
At first glance, that can sound like valuable development potential.
But theoretical unused FAR and the right to add residential square footage are not necessarily the same thing, particularly when the existing home sits in a manufacturing district where residential use isn't permitted as of right.
Before assigning value to that development potential, a buyer would need a qualified architect or zoning professional to determine what could actually be built.
In other words:
Potential square footage isn't valuable simply because a database says it exists. It becomes valuable when you establish that it can realistically be used.
Even the tax valuation told an interesting story
Another data point I examined was New York City's estimated market value for tax purposes.
The city's market value for the subject was actually above its asking price.
That initially sounded encouraging.
But looking at the same figures for the two most relevant comparable sales produced a very different picture. The city's estimated value substantially understated the eventual sale price of one property while materially overstating the sale price of another.
The ranking of the three properties by tax market value didn't resemble the ranking established by actual buyers in the marketplace.
That's not necessarily a flaw in the tax system. The Department of Finance is performing a mass appraisal for tax purposes, not conducting a property-specific analysis for a prospective purchaser.
But it illustrates why tax market value shouldn't be mistaken for current transaction value.
So what was the townhouse worth?
After working through the comparable sales, condition, zoning, lot and building dimensions, location and property-specific issues, I viewed the house as having a fundamental value somewhere close to it's asking price.
But that wasn't the end of the analysis.
There was another question:
What might it take to actually buy it?
That's different from asking what a property is worth based purely on comparable sales.
The house occupied a particularly attractive part of the market: a 20-foot-wide, four-bedroom single-family townhouse with outdoor space, near Park Slope and offered below $2 million.
There aren't many of those.
That scarcity meant I could see a competitive buyer rationally moving above original asking price, even though the comparable analysis didn't necessarily justify going materially beyond that level.
I think of that distinction as the difference between fundamental value and competitive acquisition price.
They aren't always the same.
Then the market gave us its answer
The property attracted four bidders.
My clients ultimately offered a reasonable amount over ask, backed by a very substantial down payment.
They didn't win.
The successful buyer reportedly offered all cash at a price meaningfully above ours and well above what we thought the property was worth.
It's tempting after losing a bidding war to conclude that you undervalued the property.
I don't necessarily see it that way.
A bidding war tells us what one buyer was ultimately willing to pay to own a particular property at a particular moment. That's important market information, but it doesn't automatically mean every other buyer should have matched it.
Sometimes the right decision is to win.
Sometimes the right decision is to let somebody else win.
The important thing is understanding what you're buying well enough to know the difference.
The broader lesson for Brooklyn townhouse buyers and sellers
Townhouse valuation isn't simply a matter of finding the three closest sales and calculating an average price per square foot.
The better questions are:
Which sales are truly comparable?
Why did buyers pay what they paid?
How much of the difference was location, width, condition, zoning, configuration or renovation quality?
Are apparent development rights actually usable?
Are accessory spaces legally recognized?
And finally, how much of the price is supported by the underlying property and how much represents the premium necessary to beat competing buyers?
For sellers, understanding those distinctions can help identify where a property deserves a premium and how it should be positioned to the market.
For buyers, they can help answer an even more important question:
Not simply, “What do I need to bid to win?” but “At what price should I still want to win?”
That's the question I ultimately want answered before one of my clients enters a townhouse bidding war.
