How do garage conversions impact property value?

Should you convert your garage? Would your home be worth more or less with a garage conversion? I asked nine local real estate pros to share some thoughts on the topic, and here is what they had to say. I’d love to hear what you think in the comments below.

Should you convert your garage? Sacramento Appraisal Blog

Jeff Grenz, Real Estate Broker in Sacramento
Jeff Grenz Sacramento Real Estate BrokerWhen hunting for and evaluating homes for my flipper clients, garage conversions have a negative impact. In plain English, I calculate the cost to remove the conversion and restore the garage to original usage in 100% of cases. Why? Most conversions are unpermitted and ultimately that would have to be resolved. Most conversions are poorly executed, have issues with HVAC and access to bathrooms. Buyers want garages for vehicles and storage. While the conversion may have added temporary value for the seller, paraphrasing some of my favorite rock and roll: “you’re fooling yourself if you believe” it adds value for a buyer.

Patrick Hake, RE/MAX Gold, Real Estate Broker in Auburn:
Patrick Hake - Real Estate Broker in AuburnI believe that if done well, they are a wash. They add some value by increasing the size of the home, but at the same time detract value by removing the garage. If done poorly, they can absolutely remove value. This includes if they are done with shoddy workmanship, but also if they are done when there is a lack of other parking or storage space. I have seen numerous examples of homes with converted garages that have little on street or driveway parking and/or have nowhere to store the junk that would normally go in a garage. If someone were to want to do a conversion, they should have ample additional parking and a shed or some other type of storage space for typically garage stuff. I also think that when people do a permanent conversion that removes the garage door and replaces it with an exterior wall, it definitely detracts from the curb appeal and lowers value.

Here is an example of a home that was flipped recently in my neighborhood that had a full garage conversion: http://bit.ly/NG49Be There were numerous other things done to the home to update it and spruce it up, but one of the main things the investors did was to reverse the garage conversion and put in a new garage door. The bank sold it to the investors through the MLS for $185,000. It had languished on the market for quite a while before selling to them. After having the garage conversion removed and updating the rest of the interior and exterior, it recently sold for $250,000 after being on the market for 19 days.

Erin Stumpf Attardi, Dunnigan Realtors – Realtor in Sacramento:
Erin Stumpf Attardi - Dunnigan Realtors - Realtor in SacramentoThere 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 (See more of Erin’s thoughts on conversions on her blog – this text was taken from her post with permission).

Ted DeFazio, Ellington Properties – Real Estate Agent in Sacramento:
Ted Defazio - Ellington Properties - Real Estate Agent in SacramentoI can definitely shed some light on how they could possibly add value, for the right buyer. I find that the older, tiny detached garages like ones found in East Sac or Land Park barely fit a car in them as is. When converted to a game room, man cave, or office, it creates a completely private place to escape to. The best example I can think of was an episode of Interior Therapy by Jeff Lewis. In the episode, Jeff converted a backyard garage into a home office and lounge type area. This garage was previously used as junk storage and by the end of the conversion you could see how much it brought to the property.

Doug Reynolds, Better Homes & Gardens Real Estate – Realtor in Sacramento 
Doug Reynolds Real EstateIn my experience, garage conversions typically do not add value to a home. Right off the bat, a large handful of buyers will not even be interested in the property if it does not have a garage. Therefore, the seller is missing out on about 60% of the potential buyers. So now your competition/interest in the home has already dropped. Next, the question screams: “Was it done with a permit?” Most of the time, garage conversions were not done with permits. This causes red flags for buyers and also eliminates more buyers who are using financing that will not allow non-permitted garage conversion purchases. Additionally, most garage conversions have a step down into the room and it typically does not “feel” like the rest of the house. Due to this, it does not add value for the extra square footage. You lose a garage and in place have not as good quality extra square footage. This leads to using the original square footage when trying to value the home with recent sales. With all of this factored in: In most cases garage conversions decrease the value of a home. At best, the conversion equally cancels out the loss of the garage. The only time it would add value is if you are adding a bedroom and/or bathroom that was done with permits, does not have a step down, the central heat/air is tied into the space and gives the same “feel” as the rest of the home.

Rob McQuade, Better Homes & Gardens Real Estate – Realtor in Sacramento
Rob  McQuade - Better Homes & Garden Real Estate - Realtor in SacramentoAll I’d really say on the subject of whether garage conversions add value is: It depends. Are they common to the neighborhood? Some older neighborhoods of mostly two-bedroom homes have seen a large number of garages converted to additional living or bedroom space, and in neighborhoods like this it makes sense. Generally speaking, though, I think most people want a garage and are willing to double an office as a guest bedroom instead of looking for two rooms. More often than not when I take clients through homes with garage conversions I get comments like “this is kind of funky” and we have the discussion about how difficult it would be to convert it back to a garage.

Lori Najera, Fusion Real Estate Network – Broker Associate
Lori Najera Real EstateBuyers want bedrooms, bathrooms, nice living spaces and in most cases, a garage. In the past 12 years I’ve sold 3 homes with converted garages. These are their stories: 1) A single mother; 2) An investor looking for his next rental, and he liked the converted garage so he could charge more for rent (since it was called a “bedroom” – never mind that the driveway drainage was poor and it slanted down into the garage); 3) An elderly librarian who was also a first time home buyer, who had 12 cats. Yes, the converted garage was for the cats. So for those potential buyers, go ahead and convert those garages! Otherwise, please leave a garage as a garage. I haven’t even gotten into the hassle on the lending side if this conversion was done without permits. If you want to make your home appeal to the most buyers, and sell for more money, leave the garage intact.

Max Boyko, Team Hybrid Real Estate Services – Broker Associate
May Boyko, Team Hybrid Real Estate ServicesI think conversions would really be on a case by case basis… and mostly dependent on the needs of the buyer. I am a strong believer that each sale is unique, and if you are in the right place at the right time, you could sell a property for significantly more than you would at a different time. This definitely includes conversions, as some people try to maximize on their living area. Not having a garage though will definitely have a negative impact on the value. Another big factor would be the neighborhood. Many of the lower priced neighborhoods may even benefit from having a conversion (kind of like diluted price per square foot), so it may have a positive impact on the overall price. Higher end neighborhoods, however, don’t necessarily look at the total square footage to determine the price but more on the outlay, condition, and lot. It would also have a much larger negative impact in a higher end neighborhood as it’s not necessarily seen as “desirable” to live in a conversion. Maybe a cheaper alternative to an in-law quarter.  :)

Eric Peterson, Praxis Capital – Real estate investment firm 
Eric Peterson - Praxis CapitalAs far as conversions, we usually convert them back. We’ve found that most people value a garage more than an additional bedroom. The need for extra storage space along with the reality that most conversions aren’t done very well leaves us converting about 90% back to garages.

Questions: What’s your reaction to the comments above? Agree? Disagree? In what circumstances would you consider converting your garage?

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Comments

  1. Mark says

    Um, what about converting the third space of a three car garage and leaving the door on and including 1/4 of the front part for storage so there is effectively still a 2.25 garage AND a permitted office getaway with a door into the house ? I think 90% of buyers would love it .

    • says

      Thanks for the comment Mark. I think that’s generally an exception because there is still room for parking and storage. These types of conversions are easy to remove also if need be, so I’m a fan.

  2. Miesha says

    I am always in favour of a garage conversion, because it has enough space to be converted into a utility space, secondly it costs less comparable to other such if properly planned and executed. Here comes the advice of an expert. If rightly done a garage space can look awesome!! To know more such garage conversions, visit here- Lednor Construction

  3. c. brooks says

    What about tearing down an old garage and building a new one with a bedroom and bath on top of it?

    • says

      Hi C. Brooks. That’s a good question. A new garage is a bonus for buyers because buyers like new. Of course you may want to consider how much you will spend on the project vs. how much value you will get in the resale market (if that matters to you). The bedroom and bathroom on top of the garage could be a great feature for your property. Do keep in mind appraisers can recognize value for the space above the garage, but if it is not directly connected to the rest of the living space in the house, it won’t be added in to the square footage of the house. Again, it can count toward the value, but I wanted to bring up this point for clarity in case it is important for your plans. You can read more here: http://sacramentoappraisalblog.com/2013/04/12/can-a-detached-unit-be-included-as-part-of-a-homes-square-footage/

      Best wishes. Let me know if you have any insight or questions.

      • belinda says

        i’m converting the garage. I’m leaving the floor alone and just treating/staining the contract to give it a medium/distressed shine, replacing the garage looking door, to still a garage door but with funky glass, adding custom shelving, and running indoor heating/cooling. There’s a door already to have access to it but I don’t like that its through the laundry/pantry area, so I’m breaking a wall in the inside of the house and adding french doors. That definitely adds value, no? I mean, if they want to use it as a garage, the flooring is intact, they still have a garage door, and a HUGE bonus they have shelving. Besides the French doors will provide easier access. Yes/No?

        • belinda says

          And I meant to say leaving the “concrete” floor intact just staining/giving it a distress sheen,

          • says

            Hi Belinda. Thanks for reaching out. It sounds like what you are doing is keeping the garage intact, but simply customizing a few things. Granted, garages don’t usually have central heat and air, but if this space can still function as a garage (car parking), that’s what it is still. It’s hard to say what it would do for value, though if it’s still a garage (but tricked out), it’s hard to imagine it will be a negative. However, I do have one concern. Keep in mind French doors between the garage and the house may violate code when it comes to having an adequate firewall between the garage and the house. This set-up could prove detrimental for you when trying to refinance or sell if you were required to cure the problem before escrow can close. This could be a costly issue for you to deal with, so you may want to investigate local code first to be sure you are comfortable with your decision. Best wishes.

  4. Shameka says

    We are in the process of closing on home. We have large family. We are planning on converting the 2.5 car garage into two bedrooms and a family room. Later we will add an attached garage. The home is a split level so it flows well. The previous owners already added a large laundry room in the garage Do you this this will hurt the value to much. Everything will be done with permits. We extend the hvac system as well.

    • says

      Hi Shameka. Thank you for reaching out. Congratulations on the home purchase too. That’s wonderful. Converting a garage is a viable option for a larger family, so I get where you are coming from. It seems to hurt value on a home when there is no garage, so adding a garage eventually will likely be a good move for you. It will be even more of a plus if the new garage still has access to the interior of the house (that makes putting away groceries so much easier too).

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