How are you doing?
No, I would not "borrow" money to put in an extra bathroom, just price it accordingly.
Warrenton is a great place to live. I have sold homes there, and many "city slicker's" would buy your home "as is", as long as they felt the price was right.
There are very few "active" listings in Northern Virginia now, and if the buyer of your house can qualify for the "new and improved" home buyers tax credit, you have to have a "ratified" contract by April 30, which is only 5 months away.
Just to review:
Anyone who is a First Time Home Buyer, or hasn't owned a "primary residence" in the last 3 years, and makes under $125,000 a year if single or $225,000 if married can qualify for up to an $8,000 tax credit.
And perhaps even more important in your case, any homebuyer who has owned and lived in their current "primary residence" in 5 consectutive, of the last 8 years, and meets the same income maximums, is qualified for a $6,500 tax credit is single, or $3,250 credit if married.
Also, (and I am thankfully almost finished), the FHA is considering tighening its lending requirements to make it tougher to qualify for an FHA loan.
What this all means to you is, if it were me, I would give the place a good cleaning, slap on some fresh paint, and get it on the market ASAP, as we don't know yet how all these new regulations are going to effect the market.
Sorrry for all the "hot air", and hope this helps,
Johnny "Culdesac" Yankoviak