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Unfinished Space or "Bonus Room"

Discussion in 'Ask an Appraiser' started by edwalk, May 20, 2006.

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  1. edwalk

    edwalk New Member

    0
    May 20, 2006
    This concerns a residence in Raleigh, NC.
    When we moved here four years ago, it was the first time we had heard of the 'bonus room'. In our house, it is the entire second story 1300+ sq ft.
    It has A/C copper piping and capped drain connections in place.
    The space is framed space only. Great exersize space and storage.
    How do I get it included or valued in an appraisal of the property?
    The generic listings I see on my property value only show the 2047 sqft of heated space and the size of the lot.
    There has also been significant improvement from the Carolina clay and weeds we originally had on the property.

    Thanks.
     
  2. Lobo Fan

    Lobo Fan Elite Member

    1
    Nov 28, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    Get a permanent heat and cooling source installed, as well as some sheetrock. It needs to be finished to that same quality as the rest of the house to get full credit for square footage. If it is finished to a lesser degree. it can get included, but at a much lesser value than the rest of the house. To me it would be the same as garage space. Unheated/cooled and unfinished.
     
  3. Mike Kennedy

    Mike Kennedy Elite Member

    458
    Sep 28, 2003
    Professional Status:
    Certified Residential Appraiser
    State:
    New York
    City Hall ...........

    check first with city (or town) building and zoning department who will supply you with the exact requirements to convert existing unfinished attic into GLA (Gross Living Area) i.e. Finished/Heated/Similar Quality area comparable to the first floor.

    make sure you obtain building permit(s) (as required), and arrange for final inspection upon completion with issuance of a valid Certificate of Occupancy. tip: in most cases unless a homeowners insurance policy has an additional rider covering non-permitted use, should you, a family member or friend who is "an expert"- though non-licensed ......in the event a fire occurs - insurance claims will typically be denied. Further, without required municipal permits (if applicable in yur location), should you decide to refi or sell, illegally finished areas will most likely (and rightly so) be indicated as illegal in a future appraisal (if done by a reputable appraiser), and hold up refi or sale. (yes it happens ALL the time by owner's failing to understand that a 50-500 filing fee for a BP and CO can potentially cost you $$$$thousands.)

    Closing note: recommend an Appraisal (Subject to completion of proposed plans & specs) should always be part of your planning process to estimate what return, if any, will the project return on completion.....could be an Over-improvement, could bring your dwelling UP TO "even with the higher end of your market" etc. Just as your team of advisors hopefully includes an attorney, insurance broker, investment advisor, wise to also include a certified appraiser as well. Good Luck with whatever decision you make.
     
  4. Restrain

    Restrain Elite Member

    85
    Jan 22, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Florida
    BTW, do it right. Spend the extra $$$ and get the texturing, etc done by a professional. You can do the sheetrock, insulation, and so forth, since that's hidden by the surfaces, but the final trim, etc should be done by a professional. That's what catches the eye and can make a big difference in the final contributory value.
     
  5. Lobo Fan

    Lobo Fan Elite Member

    1
    Nov 28, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    New Mexico
    I agree, be sure and pull all your permits and make sure the final product is of the same quality as the rest of the house. You don't want it to look like a Tim Taylor weekend project.
     
  6. Blue1

    Blue1 Elite Member

    1
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Along with finishing the space and adding heat/cool make sure you have adequate access to the 2nd story which would be an interior star-case. I just did an appraisal where there was a completely finished, heated and cooled space which only had a pull-down ladder for access. I did not count it as living area.
     
  7. Lee in L.A.

    Lee in L.A. Elite Member

    272
    Jan 24, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Haha, that's pretty weird, ladder access only. :icon_smile:
    Exterior access only is another possible issue.
    Or interior access to second floor,
    only through a bedroom or bath on the first.
    Sometimes people build strange additions. :icon_sad:
     
  8. Richard Carlsen

    Richard Carlsen Elite Member

    0
    Jan 15, 2002
    Professional Status:
    Licensed Appraiser
    State:
    Michigan
    How do I get it included or valued in an appraisal of the property?

    Included in the GLA of the house is one thing; valued in the property is another.

    For it to be included in the GLA, it will typically have to have finished walls, ceilings and floors with heat, electric and be suitable for living purposes (workout rooms count). How you do it is up to you. Be sure to check with your local building department first.

    Valued in the appraisal is another thing. Some appraisers as a matter of course will give no value to a bonus room even if it is plumbed, stubbed and ready to be finished. Why is beyond me. In my service area, we see these "bonus rooms" in both houses and above garages that have access for entry, lighting and are perfect for storage or future completion. In my market area, there is a definite premium for having this space. It costs more to construct and there is a market preference for having these areas. The bottom line is that normally the appraiser is up enough on his market to understand that there is some contributory value in the bare bonus room. It should be reflected in the appraisal report. Don't expect a lot if the room is unfinished but there should be some acknowledgment of the utility of this space.
     
  9. Blue1

    Blue1 Elite Member

    1
    Jan 14, 2002
    Professional Status:
    Certified Residential Appraiser
    State:
    California
    Great point Richard. That attic-room I mentioned with pull-down ladder access was used as a 'parents retreat' of sorts. Bed, stereo system, TV, video, and uh...other 'special' things. I looked to me like they had a lot of fun up there. :icon_mrgreen: I included the space as an amenity.
     
  10. Artemis Fowl

    Artemis Fowl Senior Member

    0
    Mar 16, 2004
    Professional Status:
    Certified Residential Appraiser
    State:
    Michigan
    Like Richard says.

    I've seen homes that are 1.5 story in design but have unfinished upper levels. If there is stairway access I refer to these types of spaces as having "finish potential". Can't include as GLA but it is noted and considered in the valuation. As others have already noted...you need to be careful about non-permitted improvements.
     
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