Garage Conversion Question. Help

[davidjames]

Its my first time running across this as IVe been appraising for 6 months. Just had a home with a garage converted into 2 bedrooms. They piped gfa and all electrical into it and the construction conforms and looks good(drywall, wood subfloor, carpet, etc). The question is do I count this as GLA or not??
County records from 3 months ago didnt recognize it and to count as GLA would make it one of the bigger homes in the area. Its a small, economiclly deprived pocket of Denver. I can get to the value needed without counting it and if I did count it the subject really wouldnt fit in the overall neighborhood values. Suggestions??

Also if I dont count it in GLA how do I do that on the URAR?? I guess maybe notate it like a sunroom and comment on it and give them a little bump for having the extra space(180kish property) so maybe a 2k bump or so for 400 sf of converted space? Any help appreciated. Thanks.

 

[Tim The Enchanter]

Was there a building permit to convert it to living area? Around here if there's a converted garage and no covered parking it's probably not legal and certainly not GLA if it measures bigger by that amount than what the taxman says. In which case no permit = no value. AND a cost to cure (put in a garage door and return to ability to use as a garage) in the cost approach as a functional, and as a negative adjustment to the comps not similarly illegally equipped.

 

[Oregon Doug]

David: Your scaring me when you make comments like "I can get to the value needed..."

I see quite a few garage conversions up here - some with, some without permits. Typically if it's a deceint quality conversion, they have removed the garage door and replaced the opening with a wall and there is usually a permit - I typically include that as part of the GLA. We are fortunate here in that we can get the county records off the internet and/or through our MLS so its pretty easy for me to see if the county shows the home's larger GLA on the tax rolls. If the garage door is still there and the county does not include the additional area - then it's unlikely that there's a permit. Then you decide, based on the quality of the conversion and local custom and tradition as to whether or not to include it as additional GLA (recognize the loss of a garage).

In any case, I put the burden of proof on the owner/seller and condition the appraisal on "conformation that a building permit was obtained for the conversion".

Our Assessor can go back up to five years to collect any back taxes due plus interest thereon on any additional value added by the conversion (regardless of who did it), can require that a building permit be obtained (paid for) and that the conversion be inspected to assure that it's up to CURRENT building code - yes, this means that they can make you rip out the sheetrock to confirm that any electrical/plumbing was completed according to CURRENT code requirements.

I, the appraiser, do not wish to be held liable for all these (substantial) costs because I was neglegent in performing my duties.

Oregon Doug

 

[Scott Warner]

I agree with Lee...

 

[DHerbst]

I have seen this comment often on this forum. I looks to me to be most appropriate to measure the markets reaction to the garage conversion. If kids sleep in these bedrooms, and buyers are willing to pay for these bedrooms then your value does not equal permit.

Thats one of the many things I love about Texas, supply and demand, and good ol capitalism still count for something. (except in austin)

 

[EDWARD BERRY]

THIS is common in our market. One day I had three to do.

In this market, not finding a converted sale, I put the original size on the grid, put "converted" on the garage line and make about 110 % adjustment over a regular garage.

This is based on paired sales of conversions vs no conversions.

They ain't no zoning for interior conversions here.

ed in arkansas

 

[Judy Whitehead (Florida)]

Garage conversions are not particularly popular here. We do see some, and it is difficult to find them through resales. In Florida, we have no basements and usually no real good attic storage (too hot), so storage, car or otherwise, is important. In fact, when I have studied paired sales, the homes with converted garages don't sell for much different than the original GLA with garages. One of the other reasons could be the large retiree market, as well.

If you don't find sales in the area of other homes with converted garage space, then I would say that it is not common in the area and the market appears to prefer garages rather than conversions. I usually charge a functional depreciation to reconvert the area back to garage (removing any partitions, and re-installing garage doors, etc.) That would typically be $1,500 to $2,000 or even sometimes less.

By the way, you have to pull permits here for interior remodeling and there is a web site to check what permits were pulled. I don't consider it my duty to police the house for the county or for the lender. I usually check permits to see if anything has been added since the sale, such as fireplace, pool, etc. if I can't get information from any other source.

 

[Bemis Pownall]

Your Mentor should be helping you with these types of problems..

I certainly hope you have one

 

[Mike Garrett RAA]

Good morning Dave and happy turkey day!

Some of the advice given here is good and some of it is not so good. Since I also live in Colorado and see this alot...let me give you my prospective on it.

1. A permit should have been pulled; however, if it wasn't the improvement still affects value. You are not the "Permit Police". Your job is to determine the market value of the subject.

2. Generally what we see in this market is a one car garage converted into to a family room, single bedroom, or sometimes a small business office or beauty shop. These are generally in the 250 square foot range and are reflected on the assessor's property card as additional GLA.

3. The additional square footage is generally off set by the loss of function from "No Garage". The quality of construction will generally determine if there is going to be any gain.

4. Look for the following: It must be heated and have adequate electrical outlets. It should not have have a garage door. There should be adequate egress in case of fire.

I am concerned by your comment that it is finished into two bedrooms. This would be unusual in our market since it would be necessary to go thru one bedroom to get to the other thus creating functional obsolscence.

Hope this is helpful. Welcome to the forum....it's a great please to get assistance and there are some wonderful people here.

 

[Ross (CO)]

David, .....Converted garages are common and do happen, even if we learn of it before the county and the tax man do ! I have seen former 1-car's added to main level g.l.a. of the typical 50's or 60's rancher and seen that work done attractively. So what, now the home simply has NO garage and a larger living area. It is quite important that you discover if such work was permitted and speak to that issue in the report, especially if the county sq.ftg. total differs by 200 to 300 sf with what you measured. Sometimes that conversion work happens with a previous owner and not the one who's there now. Disclose what you learn. Your comps ideally would be homes of similar g.l.a. and also have no garage, if you can find them nearby. Just don't go too far away from that specific neighborhood of the subject....and adjust living areas and garage spaces as your local data might dictate. It is very common today to go into neighborhoods with 2 and 3 cars parked outside and along the street of each home. People have more cars per family today than in the 1960's, dad, mom, junior and sis ! Just tell your client what is there.