Home Selling in 97213>Question Details

2finish|!2fi…, Home Seller in Portland, OR

Should I finish the remodel that turns my 2-1 into a 3-2 before selling?

Asked by 2finish|!2finish, Portland, OR Sun Aug 29, 2010

A quick glance at current homes for sale using Google Maps Real Estate shows a price difference of 50-70k between 2-1s and 3-2s in my neighborhood (North Tabor). The previous owners of our house appear to have started to add a bedroom and bath in the basement, but did not finish them. We are planning to sell the house sometime in the next year. Does my Google Maps "research" really reflect the change in our selling price if we complete the remodel?

Our basement "bonus room" needs a window-well egress to be a legal bedroom. The bathroom has doors and two walls. It needs plumbing/fixtures and the remaining walls added to separate it from the utility room it is now a part of. I'm guessing all of this could be done for under $10k. The house is a 1947 bungalow with no fancy finishing.

Should we do it? Our only reason would be to increase the sale value of the house, not to use the rooms ourselves in our remaining time here.

Help the community by answering this question:

Answers

18
BEST ANSWER
You should really get a realtor into your home to give you an actual market analysis, for both a 2/1 and a 3/2 option.... this will be MUCH BETTER THAN GOOGLE MAPS (can't stress that point enough). My gut feeling as a 10 year resident/investor in SE Portland and 7 year mortgage professional is that the remodel would likely be something you regret doing after you include the time/hassle/expense and create an expectation of return on investment that may not pan out.

One thing that pops out at me is "should I finish.." if you have any "unfinished" work in the house you should definitely finish it before listing/selling. Any improvements you can do prior to list that makes your home stand out is always something you should do. Particularly if there are any exposed studs or unfinished walls etc, you could have appraisal issues. Again, a good realtor can tell you what would be needed on the spot.

Don't expect too much of a value "pop" from below grade (under street level) improvements. Even though it improves the function of your home, they still appraise kind of funny. They will show up in a report as a 2/1 with improvements- and the value will be adjusted, but they are still treated sort of different. (I know from personal experience on this one). Best of Luck to you. its a brutal market for sellers so, get your property right, get your mind right, get a good realtor, don't take any of it personally.

email me for a reference to a realtor. I know some FANTASTIC people who have lots of experience in the Tabor area. james@pdxhomeloan.com
Web Reference: http://www.pdxhomeloan.com
0 votes Thank Flag Link Sun Aug 29, 2010
Something you might do is tour listed homes in your neighborhood that indicate a bedroom and bath in the basement. Then you can see for yourself what value or perception of value this improvement adds to the bottom line. unfinished projects, poor overall condition, lack of cleanliness, smells, overgrown landscaping etc are all detriments to achieving the highest price possible. Some basements lend themselves nearly seamlessly becomming a valuable addition to the living space. Othertimes a basement with lower than normal ceilings, difficult stairs to maneuver, pipes, ductwork, etc are certainly usefull but still feel like the 'basement'. If I had to choose one project over the other, I'd personally pick making an additional legal bedroom. Far less expensive and the safety factor it brings to the basement will be a plus. Bathrooms can be expensive to finish and without a bedroom in the basement a buyer would probably not need the bathroom.

What's normal in the neighborhood? If a 2/1 is normal then leave it at that and just pretty up the basement. If 3/2 is more the norm, I think you know the answer. Howard
Web Reference: http://www.HowardPage.com
1 vote Thank Flag Link Sun Aug 29, 2010
I have to agree with the comments that have already been posted. If you can do the work for a minimal price, it is definitely be worth the trouble. "unfinished" work should always be done in order to get your property ready for selling. I live in the neighborhood, and see a price difference more in line with 25-35K depending on where the extra space is located. Just like James mentioned below, square footage below grade would be less valuable than above grade.
1 vote Thank Flag Link Sun Aug 29, 2010
In this market the cleanest homes priced right sell first. So if painting and other things will freshen up the house do that. If you spent $10-15,000 redoing the bath and bedroom with permits and new window then you might sell quicker and get your money back. How high is your ceiling and does your basement feel good when you go down there or does it feel low the ceiling? The best basement the heat ducts are not close to your head and if they are it does not feel good that is very hard to over come. I could show you homes with bedrooms in the basement and you will see what I am talking about. The more light you can get in an basement the better it feels along with head room. There are also legal headroom for living space so that will all be approved with the permits. Good luck,

Tom Inglesby, Broker
RE/MAX Equity Group
503-319-9035
0 votes Thank Flag Link Mon Sep 13, 2010
Yes definitely, a 3 / 2 sells for more than a 2 / 1 of course if done with permits.

Good luck.
Perry
0 votes Thank Flag Link Wed Sep 1, 2010
don't disregard the possibility that just doing it in this market could mean the difference between selling it at all and not. for that alone, there is perhaps more upside in moving forward on the project. I think i just convinced myself.
0 votes Thank Flag Link Wed Sep 1, 2010
Nice numbers Howard! Thanks!

Given the means and the medians you can rough out the distribution of prices. In addition to the average price difference, it looks like the 3/2s have a longer tail to the higher priced side, and the 2/1's have a longer tail to the lower price side. So a more desirable 2/1 (e.g. great condition or location) can't get much past a certain price. Likewise a less desirable 3/2 still holds value; it won't drop in value like a 2/1 might. Interesting.
0 votes Thank Flag Link Wed Sep 1, 2010
To further assist in your decision I reviewed the SOLD listings (within the last 6 months) for homes that had exactly 2 bedrooms and 1 bath and another search for only those homes with exactly 3 bedrooms and 2 bathrooms. The area was defined by Burnside (N), SE 82nd (E), Division (S) and SE 39th (W). To recap;
13 homes SOLD 3/2's Average List $320,000, Average Sold $314,222, Median List $339,00 Median Sold $335,000. For the 22 homes SOLD that were 2/1's Average List 280,947, Average Sold $280,137, Median List $272,475 and Median Sold $284,750. This amounts to a Median price of $50,000 greater for the 3/2 vs 2/1. Also, the median square footage of the 3/2's was 1972 vs a median square footage of 1546 for the 2/1's a differance of 426 square feet. I can run the numbers in a number of different scenarios. Just ask. Thank you again, Howard Page 503-516-7121
Web Reference: http://www.HowardPage.com
0 votes Thank Flag Link Wed Sep 1, 2010
Howard: Right. I realize there legal definitions of a bedroom and wouldn't list my house as having one if it didn't. My question was really "Is my cursory Google search and estimate of the work sufficient to warrant doing the work since it appears to be worth it?"

Thanks for both of your responses. I like the idea of visiting other homes with basement bedrooms. There is a house down the street with the exact floor plan as mine. It has a legal bedroom and shoddy kitchenette in the basement and recently sold for quit a bit more than I would have expected.
0 votes Thank Flag Link Wed Sep 1, 2010
I read your response to all the answers that were posted. You say, "So we could certainly have the house in fine saleable condition (just as we bought it) without doing any of this work." A word of caution, unless the basement bedroom has legal egress, your RE Broker cannot 'legally' advertise your home as a three bedroom home. Do you have any idea of how many buyers this would deter? At a minimum, you should complete the window egress project and then I will heavily promote it in the remarks section of the RMLS. I once listed a 3,500 SF home with 6 bedrooms. Problem was, three of the bedrooms were in the basement, shoddily constructed and without the proper egress. I had no choice but to list the home with three bedrooms. Yes, I put in the remarks section that three 'potential' bedrooms were partially constructed in the basement. When buyers search the RMS, the number of bedrooms is a field that used to narrow the choices. Your home with 2 bedrooms with the 3rd bedroom appearing in the Remarks section would be far less valuable than being able to place a 3 in the number of bedrooms in the home. Certainly you can find an agent that will overlook the fact that your home's third bedroom is illegal and advertise it as three bedrooms. Do you really want to work with that agent? Give me a call, Howard Page 503-516-7121
Web Reference: http://www.HowardPage.com
0 votes Thank Flag Link Mon Aug 30, 2010
I would say yes to bringing it up to a legal 3 bedroom 2 bathroom. It will put you in a whole different buyer search. Do not waste money on frilly finishes, just make sure what you do is done professionally. Make sure any work you do that requires a permit is permitted or it will come back to bite you big time.

Make sure any contractors you hire are licensed and bonded, check status will CCB. The window you install should be done by a professional to insure that it doesn not leak.

If you would like additonal consultation, please fee free to contact me. I have 20 years experience in this business in Portland. Lynn Mattecheck , CRS, Principal Broker, 503-704-7313
0 votes Thank Flag Link Mon Aug 30, 2010
Greetings 2finish,

I have been struggling with that question personally and have decided to move forward and finish a remodel that will significantly enlarge my master bedroom and bathroom. There is no question it will increase the salability of your home and selling price. My only caution is hold tight to your construction costs and do not get caught up in personalizing things like a high end sinks or toilets that a buyer will likely not pay for. I have not found much of a drop in construction costs, but do feel there will be more competition this winter. Also, don't forget to go the extra mile and obtain permits on the work. It will not only protect the investment you are making, but again give you an edge on someone else that cannot offer the assurances to a buyer.

I just sold a home in Tabor and the market is moving for well positioned properties. If you are buying up, this is a spectacular time to obtain deals on homes and some of the lowest interest rates the country has ever seen. Your timing could be viewed in hind sight as perfect! Good Luck!
0 votes Thank Flag Link Mon Aug 30, 2010
Thank you for the great answers all. Very helpful!

In our case the "not finished" means the basement bedroom has a closet, ceiling, is painted and has trim; it simply lacks an egress to make it legal. It also has a door to the unfinished utility room which, I'm guessing, was the intended bathroom location. So we could certainly have the house in fine saleable condition (just as we bought it) without doing any of this work.

Plan now is to find an agent interested in the listing and get a some sale price estimates with and without the additions. James, I'll be in touch regarding the agents you know who work in the area.

Thanks again!
0 votes Thank Flag Link Mon Aug 30, 2010
Yes you should do it. Two bedrooms one bathroom homes have a difficult time selling! If you can do a nice job for under 10K - absolutely every time.
0 votes Thank Flag Link Sun Aug 29, 2010
I think you need to have an agent come tell you if that is going to give you the difference in price that you want...without spending the money first. They will let you know what it will cost to do the remodel and if you will get that money back plus some...OR if it will make no difference in the amount of money you will get back. I know that unless a person can create those rooms and it makes sense with the existing floor plan...it would cost more to do that type of remodel here in the Grants Pass area than they would make back in the sale of the home. Ihope you get what you want so that it all makes sense to you!! Both common sense and dollars and cents!!
0 votes Thank Flag Link Sun Aug 29, 2010
I would say if you can do it, go ahead. Increasing the value using $10-12,000 and even just doubling your investment would be worth it. It would make it more attractive to a buyer. I'm not sure how you're obtaining your figures so I will not comment because there's too many variables such as your location, values of other homes in the neighborhood (will this make you the most expensive home on your block? not necessarily a good thing) and other information about values in comparison to your home.

The best way to determine if its a good idea is to have a Realtor come out and give you your market value at today's condition, and then with the additions. Any Realtor would be happy to do it, but of course you would want someone very familiar with the Tabor neighborhood.

Its a pretty simple decision once you have the numbers in front of you, then you can make an informed choice. I would be happy to help if you give me a call, as my office and business is in the inner city neighborhoods.
Best to you,
Marge
0 votes Thank Flag Link Sun Aug 29, 2010
Its difficult to justify the expense of completing this remodel project if you're going to have to pay a contractor to do the work. Essentially, you'll break even at best or, more likely, end up paying more to have the work done than you'll be able to recoup. Checkout Remodeling Magazine's "Cost vs Value" info to form your own opinion.

I've been a real estate broker and amateur "serial home remodeler" for nearly 20 years.

Hope that helps!

PS. We'll have more info soon at http://www.fearlesshomebuyer.com
0 votes Thank Flag Link Sun Aug 29, 2010
If you could do this for $10,000 it would be well worth it but that sounds optomistic unless you are doing it yourself?? Don't forget to get permits. We would be happy to recommend a good contractor and take a look for you. Best regards, John
Web Reference: http://www.hatchhomes.com
0 votes Thank Flag Link Sun Aug 29, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer