Adding a bedroom to a 3 bed/2 bath SF ranch house

Asked by Thisisfors, Warm Springs, Fremont, CA Wed Jun 15, 2011

We have a 3 bed/2bath ranch style SF near mission blvd. We are considering adding a bedroom. We already have an extension to the house which makes it different from other 3 bed/2 baths in our area, it also makes our square footage same as other 4 bed/2.5 baths in the neighborhood. How bad is it to be unique?. How much will this affect the value of the house generally considering it wont affect the flow of the house as much?

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John Arendsen, Agent, Leucadia, CA
Fri Jul 1, 2011
After re reading your question I'm finding it difficult to see how economic obsolescence applies in this scenario.

Economic Obsolescence:
Also referred to as external, location, or environmental obsolescence, this type of depreciation occurs outside the subject property. Typically this type of obsolescence occurs sometime after the property is built, as the environment around the home changes.
Examples include airport noise, toxic waste, nuclear power plants, freeway noise, dust and air pollens, changes in zoning, and more. For this reason, properties located next to the freeway or under a flight path will experience reductions in value. Some even say that economic obsolescence occurs when market demand changes. Consider a home with only one bathroom. If all the new properties in the area are being built with two or more bathrooms, obsolescence can occur.
Most economic obsolescence is incurable, mainly because it is out of the control of the owner of the subject property, and any effort to cure such a problem would be very costly and value depleting.
That said, it’s important to understand obsolescence and the effect it can have on the value of your home. Often times appraisers will note some kind of obsolescence, which can make financing very difficult. In fact, some lenders may decline your mortgage application if they find obsolescence on the appraisal report that they feel is a detriment to the value of the property.
Consider all this when selecting a piece of property, as issues even miles away can pose a threat to the value of your home.

Being that what you are describing is not "outside the subject property" I hardly see where this applies.

Functional Obsolescence:
When properties are built, they don’t always adhere to the standards of a given neighborhood, floor plan, or site design. When this happens, depreciation is caused by a loss of building utility, otherwise known as functional obsolescence. In other words, if a building has reduced usefulness due to poor design, the value must be also reduced.
Examples include buildings that are too big or lavish within a certain area, which is considered an overimprovement, or a property that is relatively small or poor compared with those around it, which is considered an underimprovement. If a building is said to be out-of-place or poorly designed for its location, it could be considered functionally obsolete.
If a property lacks a feature such as sideyard, or only contains one bathroom despite having five bedrooms, functional obsolescence occurs. Keep in mind that it can be curable or incurable, depending on the situation. If it’s possible to tear out a wall or add a room, assuming cost is less than the value benefit, it’s considered curable. Incurable obsolescence is typically defined as an overimprovement that will suffer value loss whether kept intact or removed.

Now base on part of your question: "We already have an extension to the house which makes it different from other 3 bed/2 baths in our area, it also makes our square footage same as other 4 bed/2.5 baths in the neighborhood." If I'm interpreting this correctly there are already other 4&2.5's in your neighborhood.

What it sounds like you want to do is make your present 3/2 look like other 4/2.5's that currently exist in your neighboorhood. You also indicated that "it won't affect the flow of the house as much" That being the case I am having a difficult time seeing how you would suffer from functional obsolescence.

If you wish to pursue this please feel free to email me a few pics [onthelevel@cox.net] showing these improvements/alterations, etc. We will be happy to evaluate them for you at no charge. In addition to being a RE broker I've also been and continue to me a general contractor for the past 25 years.

One our specialties has been remodeling and room additions. Additionally my daughter is a seasoned and very successful interior designer who has specialized in high end homes in Rancho Santa Fe, La Jolla, Del Mar and throughout the San Diego area for 12 years. Together I'm sure we could render a sound and professional opinion. Good Luck.
0 votes
Deborah Garv…, Mortgage Broker Or Lender, San Diego, CA
Fri Jul 1, 2011
"Unique" is one of the scariest words to a lender when it comes to financing. Next is "Economic Obsclencence" or "Functional Obsclencence". Over improvement to the area or completely unique design for the neighborhood is the ticket to thwart financing opportunities in the future. Just ask anyone who tried to finance a Geodesic Dome...very difficult. A log cabin is easy to finance in Lake Tahoe and virtually impossible to finance in Fremont.

Karen Fiddler has given you excellent advice: If it is for your enjoyment and resale is not a consideration or getting value back for your investments...do whatever you want and create the perfect home for YOU. However, if you are looking to sell down the road staying within in the "parameters" of your neighborhood is important.

Additonally, if you want to protect your financial investment and be sure that there is improved value somewhat reasonable for your invested dollars I would recommend you employ an appraiser to give you a report of "as is" value versus "future value" of the property. An investment of a few hundred dollars is well spent to insure you are building your equity and not just spending money.

My comments are based upon years on construction experience and being a 203K renovation specialist. My "poster child" homeowner lived in Bellevue, WA and invested a full 106K into a remodel that netted him 15K in improved value. Nightmarish situation. All construction, IMHO, falls into the "measure twice, cut once" realm.

Best of luck!
0 votes
Dawn Rivera, Agent, Fremont, CA
Mon Jun 27, 2011
Hi Thisisfors, I think your idea of turning the small dinning room into an office is a great idea. You can put in a closet and use it as a built in file cabinet area that can be turned into a closet if you want to make it into a bedroom later. Also if you add french doors it will look nice and you can use curtains for privacy if needed. Then when you sell it will give you added value because with the closet you can list it as a 4 bedroom instead of 3.....
Good luck, Dawn
0 votes
John Arendsen, Agent, Leucadia, CA
Thu Jun 16, 2011
Sounds like you've got a great plan brewing. All the best to you and your family and enjoy your home as a home and a place you can reflect on and remember with pride and joy for years to come.
0 votes
Thisisfors, Home Owner, Warm Springs, Fremont, CA
Thu Jun 16, 2011
Thanks a lot everyone. Our original floor plan has a very awkward & small family room with no informal dining area. With the home expansion (we bought the house with the expansion) we get a nice big family room and now we use the old family room as a formal/informal dining area which can seat upto 10 people. So the kitchen, dining and family room form one big nice open living space. Our current formal dining space can seat only about 6 is unused and earlier we werent going to buy the house because we saw that as wasted space.

Part of the reason we want to convert that space to an office space/bedroom is personal enjoyment / need and we dont plan to spend a lot on remodelling, but I was wondering if it would have a negative impact on the house price.

Oh, Steve thanks for those links. I will definitely take a look at them.
0 votes
Steven Ornel…, Agent, Fremont, CA
Thu Jun 16, 2011
Thisisfors:

One other thing. If you are a "do-it-yourselfer" or "just want to know what you don't know" about a particular aspect of your home take a look at the Building Education Center http://www.bldgeductr.org

In 1993 I tore my own house down to the subfloor, gutted all the old electrical, HVAC, etc. and doubled its size. The single best thing I did before doing this was taking the "Homeowner's Essential Course - How to build, Remodel, and Maintain your home". This course allowed me to perform as the "General Contractor" during the whole process. I used the savings to install many upgraded systems/features.

You will be happy to know they also have various educational formats on numerous topics:

http://www.bldgeductr.org/intensives.html
http://www.bldgeductr.org/workshops.html
http://www.bldgeductr.org/seminars.html
http://www.bldgeductr.org/shortclasses.html

Best, Steve
0 votes
John Arendsen, Agent, Leucadia, CA
Thu Jun 16, 2011
"Unique" is a matter of opinion and personal taste that you can't always take to the bank on the back side. It can come back to bite you in the wallet. If there are improvements you want to make that give you personal joy and comfort and you plan to stay put for the long hall by all means do whatever floats your boat. Just remember there may be a price to pay. There's nothing wrong with being a little eclectic but you don't want to end up with a "Winchester Mansion" with stare cases leading to nowhere.
0 votes
Karen Parsons…, Agent, Laguna Beach, CA
Wed Jun 15, 2011
Hi,

Unique is fine...the main thing is not to spend so much that you can't recover it in a sale..if you are planning to sell. If this is for your enjoyment...then do what you like. If you are planning this expansion to sell, I would suggest you get some comps from an agent in your area and see what the homes with more space and bedrooms are going for....what the value is.

Karen
0 votes
Pacita Dimac…, Agent, Oakland, CA
Wed Jun 15, 2011
If your expansion/remodeling is in keeping with the flavor of the neighborhood, then it's probably mostly good.

But by being unique, you mean outrageous, then you could be limiting your target market should you decide to sell later. Not everyone is ready to be viewed as eccentric. And most people who buy property may also be thinking of the likelihood of selling the property later on. I wonder today how many people actually bought the geodesic domes and if these domes sell well and easily.

To figure out what your renovations, etc may be worth in terms of cost vs value, here's a link to Remodeling Online

http://www.remodeling.hw.net/2009/costvsvalue/division/pacif…
0 votes
Steven Ornel…, Agent, Fremont, CA
Wed Jun 15, 2011
Thisisfors:

"How bad is it to be unique?"

Unique is good; however, understand this is a sliding scale starting with “nice” and ending up at “NAUSOUS” Improve your home tastefully with consideration for function and flow and you are sure to add value. Getting away from the "cookie cutter home” is a most always a good move because it provides originality and/or distinction.


"How much will this affect the value of the house generally considering it wont affect the flow of the house as much?"

Simply, Buyers pay more for habitable square footage than they do for raw land. The more you make your living space functional and aesthetically pleasing the better the premium you will capture as compared to other homes that have not taken this step.

Best, Steve
0 votes
Brian Ripp, Agent, Fremont, CA
Wed Jun 15, 2011
Being different or unique is a good, (as long as the floor plan makes sense and not a mystery house).
As for being larger than others, appraisers often use price per square foot, so finding a value for your house should not be impossible.
good luck,
Brian
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