Imagine a home owner adds a “Bonus Room” on the rear of a house. It’s nice to have the extra space, right? Well, imagine one of the rear bedrooms now no longer has a direct exit to outside of the home. Is that going to be an issue?
The Problem: This home above has an addition of a Bonus Room that essentially removes direct exterior egress from one of the bedrooms. No big deal, right? Well, it actually is a big deal because by definition a bedroom must have two methods of egress. If you didn’t know, according to International Residential Code (R310.1), a bedroom needs to have one doorway that opens to the interior of the house and one doorway or window (of adequate size) that opens directly to the outside of the house (read here for more on what makes a bedroom a bedroom). Thus when an addition of a Bonus Room, Family Room, or Whatever Room blocks the secondary egress in a bedroom….. Houston, we have a problem! All of the sudden a room that was previously considered a bedroom is technically no longer a bedroom. If you’re interested in reading the nitty-gritty of various national codes on the subject, check out this document (pdf).
Impact on Value: Being that I’ve seen this issue twice in the past month, I thought it was worth kicking around some thoughts. Like most things in real estate, we need to look at the problem from a few different angles:
- The Lender: Keep in mind a lender might not want to lend on a property when there is a blatant safety issue. Or a lender might ask for the addition to be removed, a secondary egress to be added in the “bedroom” if possible, or for the appraiser to not consider the room as a bedroom any longer. Ultimately the appraiser can ask the lender for some direction or advice, but at the end of the day the appraiser has to communicate very clearly and make decisions that will lead to a credible value.
- Not Code Enforcement: Let’s remember it’s not the appraiser’s job to enforce code violations or stop a deal from moving forward if there are code issues. Increasingly lenders want appraisers make comments as if they were home inspectors, engineers, or code enforcement officers, but the appraiser’s job is to come up with a credible value. Bottom line. At the same time, appraisers need to know enough about building code to be able to recognize a blatant egress issue, disclose the issue, and consider if there is any impact on the value (there may or may not be).
- Less Bedrooms: Decreasing the bedroom count could impact value since a property is likely less marketable with less bedrooms.
- Permits: Let’s realize this addition may not have been done with a permit in the first place, so the appraiser is going to have to figure out what the market is willing to pay for a house that has some non-permitted space. Some appraisers will not assign any value to a non-permitted area, saying “no permit = no value”, while others will try to figure out how much the market is willing to pay for the house in its non-permitted state. Read more on a lack of permits here. Remember that some additions increase the functionality of a floor plan in a positive way, whereas other additions make a floor plan very funky (in a bad way).
- The Whole Enchilada: Ultimately, I find myself looking at the “whole enchilada” or entire package of a house when trying to figure out how a layout like this might be seen in the market. For instance, in a recent appraisal consulting assignment, an owner hired me to help him see the market since his house was not selling. On paper it looked like the house should be valued toward the top of the market because of its much larger size, but in actuality the lack of upgrades and funky floor plan (that blocked egress from one bedroom), ended up meaning the house attracted zero offers and was more comparable with the bottom of the market. The way I knew the house was more closely aligned with the bottom of the neighborhood spectrum was finding a few odd floor plan sales (that was lucky), the subject having zero offers at a higher price range, and even a previous sale of the subject property from years ago that showed it sold at the bottom of the market at the time despite its very large size.
I hope that was helpful. By the way, thank you to home inspector Ken Ives for a good conversation on some of the above points as I prepared this post.
Questions: Any thoughts, insight, or stories to share? Did I miss anything? I’d love to hear your take.
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Another great post. I agree with everything except the bedroom count. I have run the analysis a few different times over the years. In my market GLA is GLA. Bedroom count, given the same GLA, does not have a significant affect on value or marketability for a single family home. It does appeal to a somewhat different market segment, but the value is about the same (within a reasonable range). Interestingly, for a condo it does make a big difference.
Thanks Mike. I always appreciate your take. I generally agree with your statement here, though we still have to entertain any impact of having only two bedrooms instead of three (as was the case here). I know some buyers would realistically use the “bedroom” still as a sleeping area despite not having an adequate secondary egress from the window (though it’s certainly unsafe). There is always so much to consider. I’ll be curious to see what type of comments stem from this post. I’m expecting lots of insight and some good stories. Thanks again.
Great post Ryan. I think this would be a difficult appraisal problem because we often do not know if and when our comparable sales have functional or legal problems. This is not something that agents like to advertise. I would have loved to see interior walls on this sketch so I could speculate about ways to possibly cure the problem with the lowest cost. Maybe we could install some sort of Star Wars Escape Pod and bring this baby up to code 🙂
Thanks Gary. I’m all for a Star Wars Escape Pod. I agree about comps. It’s not easy to know when something has an odd layout. Sometimes aerial photos or MLS photos can give us clues, but I have yet to see written, “Awkward layout. Be warned.” 🙂 Sometimes when taking on an assignment like this I talk to the owner about the difficulty of narrowing down a precise value, and thus the importance of focusing on a reasonable range of value instead. That’s exactly what I did for this assignment because I think it served the owner best.
Related: The enclosed patio. Even if it has heating and cooling, they often are funky flow-wise and sometimes the home then lacks a back covered patio. Sellers can’t comprehend that the funky former-patio room has less value per square foot than the rest of the house and they end up overpricing.
Thanks John. Yeah, lots of sellers tend to want to include an enclosed patio in the square footage, but the quality is usually far less. I rarely count an enclosed patio in the square footage unless it is very nice (feels like the rest of the house) and doesn’t feel like an enclosed patio. It sure is nice though to have an extra space that is not quite house, but not quite outside either. I’m a fan of enclosed areas. For any onlookers wondering about enclosed patios, here is a different post: https://sacramentoappraisalblog.com/2014/09/30/does-an-enclosed-patio-count-in-the-square-footage/
Wow! Perfect post on enclosed patios.
You are too kind. Thanks so much, John.
Looking at this problem from another angle is helpful too. While real estate agents may not like to “advertise” negative issues with a property it is very important that this type of information be made available in a private format via the local MLS. It would help appraisers do their job better and it would help agents trying to sell such a property in the future to price it more competitively by knowing that it sold near the end of the range previously.
Very true, Tom. Thank you.
My husband and I are buying a home with a master bedroom that only has sliding doors that go out to the “patio”(No windows). The issue here is that this so-called patio was actually made into a room, with glass windows and a door to the outside. It is also part of the heated area. The property Appraiser has this room addition listed, so I assume it had to be permitted. The room is fairy dark. The other issue is as soon as you step out of the bedroom into the inside of the home (Living room}, you step down about 6-8 inches into the sunken living room. I never thought about it until I tripped leaving the room while at the home. We are going to the top of our budget on this, but I now feel there may be issues. I am not sure how worried I should be, The escrow check was given to the title company already (but not cashed) by my husband.
I meant “The room is fairly dark”.
Hi Melanie. Thanks for reaching out and sharing your story. Congratulations on the purchase too. I have a few thoughts, though I will say it’s hard to get a perfect picture of your situation since I have not seen it.
1) Just because the Assessor mentions it in their records does not mean it was permitted. I have seen many situations where the space is being taxed, but it was not built with permits. If it’s there, you may be taxed on it, but that doesn’t make it legal.
2) It is okay to have a slider to the rear instead of a window. A bedroom either needs an egress of a window of adequate size or a door. Just a heads-up in case that was not clear.
3) From a value standpoint there may or may not be any negative issue with the set-up. This is why I said above, “appraisers need to disclose the issue, and consider if there is any impact on the value (there may or may not be).” The key here is whether you are comfortable with the layout and that you feel safe and good about the house.
Did the lender have any problems with the layout? Did the appraiser mention anything negative? Have you talked with your agent about this issue? I might recommend talking this through with your agent for starters to hopefully gain some more clarity of thought.
Any other questions? Let’s chat.
Thank you for the reply!
The Slider goes to a completed room (Redone patio, made into a room) , not outside.
I didn’t know that the information on the property appraiser’s website does not necessarily mean it has been permitted. Thank you for that information. I called the Property appraiser’s local office and he told me I needed to speak with the Plans and Development dept. I left them a message and am waiting for a call back.
I used to be able to speak with the county about all permitting issues. Now, they have changed it. I have to drive downtown and pay 16.95 to see any records/and/or microfilm. I have been through nightmares with homes we are trying to buy. 3 sellers (in a row) changed their mind and didn’t want to sell after I spent all of that money, We have had permitting issues, and Homes that didn’t appraise.
Overall. we have spent about 3K in Appraisals and different kinds of inspections over the last 2 1/2 years. We are supposed to order the appraisal today.
The sunken living room is a different issue – I didn’t think about it until I tripped stepping out of the master bedroom (which drops right into the lower level floor of ceramic tile). This needs to be remedied too. It’s a nice floor plan, except for the floor level dropping about 6 inches, from the bedroom, living room and the large foyer. I have come to the conclusion that raising the floor is the best fix, instead of fooling around with guard rails, Step down signs, etc. I just do not know if it’s in our budget. I see this as a major tripping hazard (Since all of the floors are the same white ceramic tile) and a liability. I know I am going off subject here, just wanted to mention this other issue again.
Thank you again,
Melanie
Thanks Melanie. The sunken floor sounds interesting. There are certainly homes with varying levels. I sometimes see “conversation pits” too where an area is maybe 1-2 ft below grade. It sounds like something you will figure out, and I’m glad you have a couple of options. Homes require so much work. I hope everything works out. I’m so sorry to hear of how much you’ve spent on appraisals and inspection reports.
Hi Ryan,
I came across this type of thing recently though it did have a second egress to the outside, you still had to go through the master to get to it. It was really odd. I can see that working for an office but not an additional bedroom.
Thanks for the great post!
Interesting. Thanks so much DeeDee.
Another aspect for non-permitted additions. If their is a fire or other catastrophe, the insurance company may not pay out due to additions not subject to code enforcement.
Hi Mark. I’m really glad you mentioned that. Solid point. Thank you.
I have room we dived one. Made two room but turn bed room kids one no window kids we try kids back childran service in one ex
Thanks Nancy. If you had a question about this too, I’m open ears.
Hey Ryan,
I’m an agent with a listing that has a floor plan very similar to the above. One of the bedrooms has a door that opens to the hallway and a window that opens into an enclosed patio/bonus room. Do you know if this will be an issue for a potential VA buyer?
Hi Danielle. It’s impossible to answer your question with 100% certainty since I have not seen what you are talking about, but I don’t typically see issues like this thwart a loan. Of course when properties have an awkward layout or something that was not permitted there can be value issues (the property appraises for less than the home was priced). But a value issue is not the same thing as a funding issue.
I hope everything goes smoothly on your end.
Thank you so much, this is helpful! My concern was if an appraiser would flag it as a safety issue due to the window egress opening into another “room” and whether that would be a problem with a VA lender prohibiting financing. I appreciate the insight!
That could happen of course. It’s just appraisers aren’t code enforcement officers, so it may not happen. My first response may have been a little too optimistic. Let me share some more context.
I see properties like this sell all the time with appraisals involved, so clearly this isn’t a total stop for an escrow. Yet I think each individual appraiser is going to have to consider how to go about talking about it and whether it needs to be repair or removed. Personally I would tend to mention it and not condition removal because my job is value – not code enforcement. That’s me though. Keep me posted if you end up having any hurdles. Keep in mind too if this structure looks profoundly unsafe in person that could be a total game-changer with how an appraiser talks about this.