Monday, August 4, 2008

Ask Erin: Does a Garage Conversion Add or Reduce Value?

I was having a conversation with a prospective listing client in Land Park this last week regarding if having a converted garage adds or reduces the value in a home. To clarify - this would be a garage that has been converted in to living space.

Let me start by saying that not all garage conversions are created equally. I have seen conversions where you would never know that a garage existed in the space prior to the conversion. The old driveway was demolished, and landscaping was planted in its place. The garage door was removed, and in its place siding that matched the rest of the house was installed. On the interior of the house, the transition from the interior to garage conversion was seamless - there was no step down, the decor matched, flooring flowed, drywall matched, and the room was tastefully painted.

On the other side of the coin, I have seen garage conversions that were a poor attempt to add extra space to the house. The garage door was just bolted shut, the driveway remained, and the transition on the interior of the house was so obvious and the workmanship so bad that it really detracted from the house overall.

One factor that must be considered when determining if a garage conversion has added or subtracted value from a home is - what type of parking situation does the property have? Did the owner only convert part of the garage, leaving an available parking space or two in the un-converted part? With the converted garage, did the owner build a separate detached garage? If there is no garage, is there covered or off-street parking? Is there space for extra storage? What type of parking arrangement is typical for the area?

Let's not forget permitting issues. Was the conversion done to code? Can the square footage added by the garage conversion be counted in the overall square footage of the house? An appraiser will not count the square footage of the converted garage unless it has been permitted and was done in a professional workmanship like manner. If the conversion was not done in a professional workmanship like manner and/or with permits - not only will it NOT ADD any value, but it may cause the appraiser to subtract value from an appraisal depending on the estimated cost to restore that space to a functional garage.

There are several factors that I take in to consideration when trying to determine what adds or subtracts value -- OR -- adds or subtracts to the desirability of a home in general. Best case scenario with a garage conversion that will add value = good workmanship, done with permits, and the presence of available garage parking that is consistent with the surrounding neighborhood. Worst case scenario with a garage conversion that will subtract value = poor workmanship, done without permits, and no available garage parking that is consistent with the surrounding neighborhood. In either case, be prepared to price your home accordingly.

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