Garage Conversion Being Used As Bedroom With No Closet

[KeyWhiz]

Never encountered this one in this manner before. Maybe some of you have?

So I inspect this house that was formerly a "model" home where they converted the attached garage into the office space for the sales project. It was never converted to GLA by the county who considers it an unpermitted garage conversion. The homeowners use it as a bedroom but it doesn't have a closet. They heat/cool it with a separate wall unit -- it's not connected to HVAC.

So I separate this space out on the grid, note it is being used as bedroom with no closet, note the wall unit, and consider it a garage conversion. I give it $10 per sf less adjustment than the GLA because I have a comp that also was a former model home with a converted garage with no bedroom and it works out this way. Seems simple enough right?

But the homeowner wants this considered a bedroom. And the lender sends over a copy of the assessor's records showing it is a 4 bedroom home. WTF? I pulled the assessor's records on the day of the inspection and it said it was a 3 bedroom.

So I call up the assessor and he says the homeowner called him up and asked him to change it, so he did. He said whether it had a closet or not wasn't a concern. I asked "what about it being an unpermitted garage conversion". He just muttered something about "yeah, we have different guidelines".

So now the lender is asking me to consider it a bedroom but give it a cost-to-cure to add a closet. And still allowing me to make the call and include commentary if I don't want to consider it a bedroom.

Also the lender says "consider it a bedroom because the assessor does". But they changed the room count AFTER my effective date. Should I be considering this as new information? Or is it irrelevant since it was changed later?

So what say you all?

I understand Fannie Mae guidelines don't require it have a closet to be a bedroom. But it's pretty much common practice to do so. At least I always have.

Also, what's the point of calling it a bedroom unless I'm going to add it to the room count, but I can't do that unless I include the unpermitted space into the GLA. Can I? Of course I could include the space into the GLA with the cost to cure, but now I'd have to find new 4 bedrooms comps with a larger GLA. And, at the end of the day, still probably only bringing the value of the home by maybe $5K.

 

[Tim The Enchanter]

If finished similar quality to the rest of the house, I'd likely call it GLA.

 

[The Bob]

It needs to have a separate egress, other than the door going into it to be a bedroom
Technically it does not have to have a closet, but that is likely a functional issue. (i.e. all your comps BR's likely have closets).

Unless you have really good data to support, I would not value as the rest of the house.
I just did one where they carpeted attached garage and installed EBB and a window unit AC. I valued it as garage since all you had to do was lift up the carpet and remove a screw driver that was keeping the garage door from opening.
IMO, it was a wash value wise...you lost some added semi finished area that really was an over-adequacy and gained a garage. I think 90% of buyers would look at like that.

 

[Michigan CG]

Does a bedroom add value? Cost to cure for a closet is about $500 or so? Why would anyone make $500 adjustments?

 

[Terrel L. Shields]

I give it $10 per sf less adjustment than the GLA because I have a comp that also was a former model home with a converted garage with no bedroom and it works out this way. Seems simple enough right?

But the homeowner wants this considered a bedroom. And the lender sends over a copy of the assessor's records showing it is a 4 bedroom home. WTF? I pulled the assessor's records on the day of the inspection and it said it was a 3 bedroom.

No No No...it is a converted garage. Segregate it and go on. It is NOT the same finish as the rest of the house (i.e.- different HA system). As a forumite once said, "Because the cat has her kittens in the oven doesn't make them biscuits." Stick to your guns.

 

[KeyWhiz]

No No No...it is a converted garage. Segregate it and go on. It is NOT the same finish as the rest of the house (i.e.- different HA system). As a forumite once said, "Because the cat has her kittens in the oven doesn't make them biscuits." Stick to your guns.

This is what I'm thinking. The finish is very close to the rest of the house. Were it connected to the HVAC I probably would have included it in the GLA in the first place. It's a close call on where to grid it, and that part really isn't the issue. It's the whole "call it a bedroom just because the homeowner wants me to and make it a cost-to-cure" thing. I've never been asked to that before. I've never seen a homeowner go to the assessor and get a room count changed. And it's not like he's going to add a closet.

I've got half a mind to make it 'subject to' the closet being added and force him to do it.

 

[Thomas Holding]

......It was never converted to GLA by the county who considers it an unpermitted garage conversion. The homeowners use it as a bedroom but it doesn't have a garage. They heat/cool it with a separate wall unit -- it's not connected to HVAC....But the homeowner wants this considered a bedroom. And the lender sends over a copy of the assessor's records showing it is a 4 bedroom home.
So I call up the assessor and he says the homeowner called him up and asked him to change it, so he did. He said whether it had a closet or not wasn't a concern. I asked "what about it being an unpermitted garage conversion". He just muttered something about "yeah, we have different guidelines".

Property record cards are not "legal documents" in that the information presented on them does not legally determine if a structure or addition was allowed under law. All they do is present to the public what they are being taxed on, whether it was done legally or illegally. That is why Tax Offices can and will change things like bedroom and bathroom counts with just a phone call. Tax Offices usually don't go into homes to inspect them unless there is some sort of tax dispute. They rely on the public to tell them the features of the home if they change substantially since the initial construction. If no permit was pulled on the property, the Tax Office has no way of knowing if any changes have been made at all.

In the case of your converted bedroom, call the Health Dept. at ask them how many bedrooms were permitted according to their septic system or sewage system. Oftentimes the wastewater capacity allotted for a dwelling is the deciding factor in the total number of permitted bedrooms. In my state, building regulations don't state that a bedroom has to have a closet to be considered a bedroom, just a window to be used as a fire escape route. Always protect yourself by going to the source and don't rely on tax cards. I'm telling you this because I work in a tax office and I see appraisers make this mistake all the time by relying on our information only and thinking that just because is was on the tax card that they are in the clear.

 

[Terrel L. Shields]

go to the assessor and get a room count changed.

Our assessor does not even count bedrooms, only bathrooms.

I've got half a mind to make it 'subject to' the closet being added and force him to do it.

No. I would simply not do it and screw the closet issue. I am not certain a closet is a requirement of FHA, Fannie/Freddy or anyone else to call something a bedroom. I would call it "off grade" and say it is used as a spare bedroom. And even if I considered it as a 4th bedroom, zero adjustment up.

A few years ago I went into a 20ish year old subdivision and someone had converted the bedroom. So I went to hunting bedroom conversion comps and the difference between a "converted" one and a house with a functional garage was almost zip...nada. nothing. But a couple of sales had built onto the house, converted the garage to bedroom while building a new garage. Those had a significant and measurable increase in price.

 

[CANative]

They're trying to intimidate you because they think you are malleable... because you sort of sound that way.

It's a converted garage. You gain some funky living area but lose the garage. Who the heck makes bedroom count adjustment anyway... except in the most "young family neighborhoods" or where people are warehoused?

I think you made the right call the first time around. You will probably lose the customer and make the borrower mad, but skru them.

 

[Ariba]

Who the heck makes bedroom count adjustment anyway...

???