Added Value of Bedroom with Legal Egress Window

[claraclownie]

My husband and I are builder/contractors and I am a licensed real estate broker. We bought a mid century, homely 4 sided ranch with three bed, one bath main and one bath in partially finished basement which we will renovate and resell. This municipality is very popular with officials who work for the city since they are required to live in the city limits. The pocket with our house has very low crime numbers so it is a highly desirable area. All the houses were built by the same builder/floor plan in the 50"s and there are no 4 bedrooms anywhere in the vicinity. None of the other rehabs have added a legal egress.

Main floor sq. ft is about 1000. Partially finished lower level is about 600 square.

Despite a 1" height issue, our inspector will allow us to put in a permitted egress window for a legal 4th bedroom adjoining the existing bath. If my husband does all the work, it will cost us about $6000 for the egress plus addition for the framing, drywall, doors, electrical for the bedroom. Renovated houses without the egress are going in the low $200's in this area. Given the $7-8K the 4th bedroom with cost, what is an approximate value we should anticipate the 4th bed should add? I was thinking about $30K. Is this off base?

I am not concerned about selling as I have already had 4 people ring the doorbell asking to buy. I am having a hard time coming up with a listing price. Thanks for your input.

 

[Russ Kitzberger]

there are no 4 bedrooms anywhere in the vicinity. None of the other rehabs have added a legal egress.

What you are describing would require a fundamental demand analysis to accurately value, which is quite an undertaking. However, You may be able to find some data using an inferred analysis from outside the immediate neighborhood, but it would take a skilled analyst to determine the level of comparative similarity in the market. That would require intimate knowledge.

If I was counseling someone that didn't want to spend $$$$ to hire a highly skilled analyst, I would tell them to survey the buyers that are ringing their doorbell and see what features they want, then advise to spec the building out for that target buyer/market. Perhaps you can even get it under contract subject to completion, like a builder.

 

[Trihard]

I highly doubt a 4th basement bedroom will add 30k to the value of the house.

 

[Trihard]

and there are no 4 bedrooms anywhere in the vicinity.

This should also tip you off that the market does not need a 4th bedroom in a 1,000 sq.ft. house. I am even doubting that you get the money back from putting the 4th bedroom in.

 

[claraclownie]

The original developer builder offered all the same floor plan- 3 bed one bath up, one bath down. The neighborhood is swarming with kids. So I am going to take this as ancedotal evidence that some of these folks have had three children- one of whom no longer wants to share a bedroom with their sibling. There maybe owners who are already illegally using the basement as a 4th bedroom.

I do appreciate that one of you does not think we will even retrieve the cost of the egress window. It makes me stop and think if it is worth our time and effort. After the time, effort and cost to install, it doesn't pencil if we cannot realize an additional $20K value. I would rather just finish this out with nice finishes, grab my profit and run to the next project. Not worth our time if we are not going to at least double our cost to add the forth bedroom.

 

[Russ Kitzberger]

The original developer builder offered all the same floor plan- 3 bed one bath up, one bath down.

Builders built houses for the target market of the time period, in some areas that hasn't changed from the 50's, in others, it is vastly different.

What production builders do today isn't that different, they design a few floorplans that appeal to the market.

This should also tip you off that the market does not need a 4th bedroom in a 1,000 sq.ft. house. I am even doubting that you get the money back from putting the 4th bedroom in.

Unless there is a market need or an opportunity to bring a 4 bedroom in at a price point that is below four bedrooms houses. Perhaps in order to get a 4th bedroom, someone would need to buy a 2000 sf house in a more expensive section of the market area. Then you have an opportunity to fill a need in the gap of price points. These gaps are where the profit is. Again, market delineation and fundamental analysis are needed. This is exactly how production builders and developers figure out what to plan, you are only doing one unit, so you can't spread the analysis costs out over many units.

 

[Dublin ohio]

Even with an egress window. It is still a basement bedroom. Like living in a cave with a window. The typical teenager would not care. But the typical teenager would also not care if it has an egress window or not. As long as they have the "own space".

 

[glenn walker]

I am taking off my appraiser hat and just put on the brokers hat...Thinking-thinking-Yenta what do you think about a 4 bedroom thatpermitted and has a window "V A 3 bedroom that has an-area that can be used as a 4th bedroom but there is no window for Jimmy to escape out in a fire or natural disaster. Should we pay more ? The Yenta screams you idiot-why would we pay extra for a window-when everyone else is using their basements as 4th bedrooms without windows right now. Yeah good point and we can always do our own window down the road. I'm getting real handy after all- I watch that home improvemnt show on TV and I have all the tools.

 

[Tim The Enchanter]

Even with an egress window. It is still a basement bedroom. Like living in a cave with a window. The typical teenager would not care. But the typical teenager would also not care if it has an egress window or not. As long as they have the "own space".

The basement was my favorite bedroom when I was that age. It had an interior access, plus door to the back yard.

 

[Russ Kitzberger]

I am taking off my appraiser hat and just put on the brokers hat...Thinking-thinking-Yenta what do you think about a 4 bedroom thatpermitted and has a window "V A 3 bedroom that has an-area that can be used as a 4th bedroom but there is no window for Jimmy to escape out in a fire or natural disaster. Should we pay more ? The Yenta screams you idiot-why would we pay extra for a window-when everyone else is using their basements as 4th bedrooms without windows right now. Yeah good point and we can always do our own window down the road. I'm getting real handy after all- I watch that home improvemnt show on TV and I have all the tools.

As someone who has done this modification to gain a bedroom for a teenager, it is no small undertaking to concrete saw out a vertical wall. Probably not a DIY project for a first timer.