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?

If you liked this post, subscribe by email (or RSS). Thanks for being here.

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).

  5. Brittany says

    We currently own a 3 bedroom 1 bath home with 1,016 sq feet. We are a family of six & were thinking about knocking out the third bedroom (it has the only access to the backyard) & expanding our kitchen & eating area. Then converting our 1 car attached garage into a master bedroom and bath with another access to the outside. We plan on raising the floor & insulating it so that it works more with the rest of the house. We do also have a 2 car detached garage as well. We plan on doing all the renovations ourselves. We have out grown the house & I was looking for a way to add square footage without adding on, however I don’t want to put money into this project if it will not add more value to our home. Any advice?

    • says

      Hi Brittany. Thank you for reaching out. Of course I don’t know where you are located, so your local data will be the final authority on how the market would respond to your situation. However, I will say the following: 1) It’s a good thing that you have a detached garage. Having garage parking (and storage) is key for some buyers, so having that already is a real asset; 2) Good for you to raise the floor and add insulation. When a garage conversion feels more like the rest of the house, buyers tend to treat it accordingly rather than walking into a house and feeling like the garage was converted, but it still feels like a garage; 3) It sounds like your family needs more space. Personally if I were in your shoes and did not plan on moving right away, I would convert that garage space (especially since you have a detached garage already). We always have to consider the value of our homes, and we certainly don’t want to diminish that. Yet at some point we have to make decisions for comfort so we can really enjoy our homes. Again, I’m not the final authority on your garage situation because I may or may not be in your market, but I will say a home with a larger and remodeled kitchen as well as a 2-car detached garage is appealing to many. 🙂

  6. Kevin says

    We don’t live in Sacramento, but came across this when looking up details of a garage conversion and value. Our house has a small detached garage from the house that we are thinking of converting. In our case I think it makes sense, but would love any opinions. The interesting thing about our detached garage is there is not even a concrete driveway that leads to it. Honestly, putting in a driveway doesn’t appear to make a ton of sense given it’s an older single car garage that we probably wouldn’t even use as a garage anyway. We have a separate gravel driveway currently. In the end we are thinking of making the garage into an office/craft area. In our case, I don’t feel like we are really taking away anything since the garage isn’t a major selling point anyway since you can’t really park in it now. Any thoughts?

    Kevin

    • says

      Hi Kevin. Thank you for the comment. If you are concerned about value, it all comes down to how marketable that detached garage is for your area. If you are on a tiny subdivision lot, it may mean more to the market, but if you are on a larger-sized lot with several outbuildings, the garage might not mean much at all. If the garage is further from the house anyway, that may also mean it is not as much of an asset (it’s hard to park in the garage and walk in groceries from a long distance away). These days it is very popular to have a detached office, man cave, she shed, or whatever. It sounds like you have some fun plans in the mix. If you are concerned about the lack of a garage, you can always convert your area in such a way so it is fairly easy to return the space to a garage if a buyer requests that. Honestly, I did this in my own house. I have a 4-car garage, and I turned one space into a home office. It works extremely well, and all who have seen the office love it too. Granted, I still have ample parking space, so my situation is a big different than some of the scenarios above. Personally I think my personal garage conversion is a strong selling point, but at the same time it is done in such a way to be able to remove if needed. Hope that helps.

  7. Jessa says

    Hi I’m buying a house which has original 5 bedroom, a huge bonus room and a 3 tandem car garage. The owner of the house converted the bonus room into two bedrooms and one storage in a tandem garage. The conversions were done nicely but without permit. Do YOU Think my lender won’t have a problem for me getting a loan ?

    • says

      Hi Jessa. Thanks for reaching out. It’s hard to say how a lender will respond to the conversion of the Bonus Room. In my experience many lenders do not care as long as the work is decent, but one of the bigger factors is whether there are any safety issues. Bedrooms need to have a window or door to the exterior to quality as a legitimate bedroom. If these “bedrooms” do not have that, it is probably a code violation as well as a safety issue, and I can see a lender and an informed appraiser pointing out the issue. Here is an article on what it takes to be a bedroom anyway in case it’s relevant: http://sacramentoappraisalblog.com/2014/09/09/the-4-requirements-for-a-room-to-be-considered-a-bedroom/

      I am not sure what you mean by the garage conversion, but it sounds like you are saying the tandem space is converted to storage. If there is simply a wall and door in this portion of the garage so there is storage, it’s hard to think it will be a big appraisal issue. Some lenders freak out over any non-permitted issue, but a storage area in a garage is probably not a big deal in most cases from the appraisal side of things at least. The rationale is that it is a low-cost item and it is very easy to remove. Moreover, many buyers use a garage for storage anyway, so it’s not a huge loss in utility if there cars cannot technically fit in the garage (how many people actually park in all spaces anyway?). I cannot speak for a lender, but I will say most appraisers probably aren’t going to get too picky about that (keep in mind I am picturing one wall and a door (and nicely done)).

  8. says

    Hello. I am considering converting my detached singled car garage into a studio apartment . Of course I am hiring a contractor and will get the required permits. The garage is about 300 sf. The house is old but the garage is new construction, built in 2004 or so. I plan on plumbing it with a kitchenette and bathroom. I’m in the midtown area so the desire for rents should be good. I figured the rental income will be good but at the same time I’m thinking that it might be a little small. I plan on having French doors in replacement of the garage door to give it a more open feel and it would open up to a nice paver stone closed patio so I think it will be done nicely. My main concerns are that for future resale, buyers would rather have a garage for storage and to park their car and also the dollar amount I would get for 300sf. Would the cost out weigh the benefits? I don’t plan on moving any time soon.

    • says

      Hi Justin. Thanks for reaching out. Great questions. It’s impossible to give an exact answer without doing research, but I have a few thoughts for you:

      1) Rent: It really comes down to the rental income. Do your homework to be sure you can rent it out at a rate that makes sense for the project. This is where you can answer the question of whether the cost outweighs the benefits or not. Having rental income is attractive to future buyers too. Rents in Midtown have been going crazy, so hopefully you can get some cash flow going if you move forward. I know there will be other one-bedroom examples for rent, but I might consider what a 300sf accessory dwelling would rent for as it might not be the same thing as a studio apartment twice the size. One other thing to consider is that future buyers might not rent the place, but they might use it for an office or an in-law quarters. Having an accessory dwelling can be a huge benefit when it comes to utility.

      2) Storage: Do most people park in their garages in the neighborhood? If they tend to use their garage for storage, you can always try to add a shed to create some more space for storage to help offset the negative of not having storage. I know lots in Midtown are small, so that might not be realistic. A future owner could always use the rental unit for storage if they really wanted to do so. In my experience I would say many people don’t park in a one-car garage because they tend to keep their stuff in there. Yes, your set-up would potentially turn off some buyers. But it could also be a huge asset for most buyers.

      3) Square Feet: As an FYI, the 300sf would not be added to your main house, but could still add to the overall value. Here is a post to talk about why detached structures are not included in the main living space of the house. http://sacramentoappraisalblog.com/2013/04/12/can-a-detached-unit-be-included-as-part-of-a-homes-square-footage/

      4) Permits: Good for you to go about this the right way.

      Let me know if you have any questions or thoughts you’d like to kick around.

  9. Suganya Damodaran says

    Hi,

    I am planning to buy a 4 bedroom house in a very good location and planning to put an offer soon. My only dilemma is that it has an office room with ac/ heater built in the garage without permits. What are the associated risks in buying this house? Do you think I should not put offer in this house or let it go?

    • says

      Hi Suganya. Thank you for reaching out. Since I cannot see what is there or how it was built, it’s impossible to comment on risks. I might recommend considering the quality of construction (how well it was built), the way buyers might respond (if that’s a big deal to you), how difficult it would be to remove (if that’s important to you), and if there are any safety risks associated with the conversion (breathing in fumes, shoddy workmanship, etc…). I think if you weigh these issues that may help you come to a decision. People feel differently about conversions based on so many factors. For me I would feel comfortable with a smaller part of the garage being converted for an office if it was done nicely and posed no safety issues for users of the space, though that’s just me. To each his/her own.

  10. Theresa says

    We have a 2/2 1,200 sqft, SFH under contract that we plan to flip. Most of the homes on the cul de sac have 1 car garages. This house has a 2 car garage. The garage shares a wall with the kitchen and the kitchen is small. Would it make sense to to move the wall in the kitchen out thereby reducing the 2 car garage to a 1 car garage and increasing the size of the kitchen? Thank you.

    • says

      Hi Theresa. Thanks so much for reaching out. That’s a great question. I guess the answer comes down to how much it will cost you to move the wall and how much that will really impact value. Also, how much is the extra garage space really worth? If you look at the numbers and it seems like all the work of the addition (assuming you get it permitted) won’t yield much value, then maybe it’s best to do a thorough but quick flip with what you have right now. If the rest of the neighborhood only has a 1-car garage though, it might be worth it to do this so you have extra space. I would wonder if the layout would be awkward though with the addition. If so, I wonder how much buyers would pay for it. There are so many factors here. I think the real solution comes down to finding similar sales that represent the property after it is repaired. Those sales will be your support for the ARV (after repair value). It might take time to research the market, but I recommend doing that and letting the market speak to you.

  11. Gabi says

    Hello Ryan,

    We just bought a home that we love and plan to stay there for a while.

    However, we have kids with special needs that need more room for play/therapy. We are thinking of converting the garage into a nice play/therapy room.

    We will get all required permits, extend AC and make it match the inside of the home. All done by a contractor, with skylights, nice flooring, lots of storage (cabinets) since we need it for the therapy material. Also, we wanted a nice large wood door, kind of french style (in place of the garage door) where therapists can come in from that door and the other side of the door can be open for one car to be parked in. We have a Nissan Leaf (small EV car) that is my husbands’ baby and he insists on parking in the garage during the night for charging. So we would make an open area with enough space for a small car to be parked in.

    We do have a nice drive way that fits two cars. Where we would leave our 2 cars during the day. All our neighbors have 2 car garage (not converted) and the 2 car drive way.

    Our garage is pretty large because it is also a laundry room. It has a bathroom right next to it as well, so when you walk in from the kitchen hall way you have two doors, one for the bathroom and one for the laundry/garage. It would be perfect for the play/therapy space since it’s so close to the bathroom. We would make it nice enough with TV in wall system, cabinets all around, also nice neutral colors to match in with the laundry area and inside the home.

    After this project is done, we have a nice size attic that we would remodel as well to be a nice storage space. No space for added sheds or anything else. Our home has lots and lots of storage inside. We live in Arizona.

    I’m thinking, everything done nicely and with all the extra storage and still a functional garage for at least one car, we should be good on improving home value/desire? Most homes in our area don’t seem to be as upgraded as ours. We live in a very desired area and our home was on the market for only 5 days with offers already when our offer was the one accepted. We are getting quotes from 12k-20k for this project. So we are on the fence about it, specially after reading this article. 🙂

    • says

      Hi Gabi. Thanks for reaching out. I appreciate your patience with a response too as I’ve been out of town for a number of days. Anyway, having some garage space is ideal if possible because it helps with storage and/or parking. Here’s the thing though. If you need most of the garage because of your family needs, then do what you need to do. Not all real estate decisions will yield value increases dollar for dollar in the resale market. For instance, an owner might spend $40K on a kitchen remodel but then buyers are only willing to spend $20K more on the home when buying it. Or maybe a built-in pool costs $35K to install but then buyers are only willing to pay $15K for it in the resale market. These numbers are just examples and were made up, but they help illustrate not all of our real estate decisions are based on yielding value for our homes. There is something to be said for value in using the feature and enjoying it. It’s impossible to say what the addition would do to your home, but I completely understand conversions in situations like this. If your main concern in value in the resale market I might consider talking to both a real estate agent and appraiser about the improvements (local to your area is what I mean).

Leave a Reply

Your email address will not be published. Required fields are marked *


*