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Old 07-23-2011, 07:54 PM   #1
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Loss of house value by losing a room?


My house is two stories with 4 bed/2 bath upstairs. While the master bedroom itself is perfect size, the bath/closet is a horrible layout and really tiny (was almost a deal breaker). Two people can't use it at the same time so my wife uses the other bathroom. From the size it should be a 3 bedroom house, as everything is so "tetris" to make it 4 bedrooms.

The master bath is shaped around the closet for the adjoining room, which is tiny (9x10). I'd like to reutilize the space from this closet to make the master bath/closet bigger and square. Even with doing this we will still have a small bath/closet, but at least it will be a functional layout.

I'd like to consume a little of the room itself, and use what's left of it as a laundry room. The laundry room is right inside the garage and makes the family room much smaller, so putting it upstairs will make the family room much bigger and will make the master bath/closet nice, plus the laundry can all stay upstairs!!!

I keep hearing (from family) that this is a bad idea because this will make the value of the house plummet since it will then be a 3 bedroom house. I also hear the opposite, which is that having a nice master/bath will counter the loss and may even raise the value.

Any inputs? I have a hammer and crowbar in my hand and am ready to use them


Last edited by sgt_utz; 07-23-2011 at 07:58 PM.
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Old 07-23-2011, 08:00 PM   #2
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Loss of house value by losing a room?


Perhaps you should ignore the question of "house value" and do what you like to make the house work the way you want. In this housing market, the value of your house may well go down every year anyway, so looking at a house as an investment rather than a place to live may not be the best way to view it.

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Old 07-23-2011, 08:09 PM   #3
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Loss of house value by losing a room?


I say get out the hammer and crowbar, the value of the hosue will escalate immensely to you once you have the floor plan/room size you and your family enjoying living in.
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Old 07-23-2011, 08:16 PM   #4
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Loss of house value by losing a room?


I'm in the Air Force stationed at Travis AFB. The plan was to buy the house, fix it up, and sell it in 5 years when my enlistment is up as an investment. If the value hasn't gone up by then, I'll stay here until it does or rent it out. So that's the only reason I'm worried about resale value. My wife and I want to move back up to Oregon when I'm out of the military
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Old 07-23-2011, 08:56 PM   #5
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Loss of house value by losing a room?


In terms of property value, as a hypothetical, moving your house from being classed as a 4 bedroom house to being classed as a 3 bedroom house may tend to reduce your property value by virtue of the hypothetical value that is derived by averaging comperable houses of similar number of bedrooms.

This is actually a good thing. This is how your property assessment is probably done for determining the value of your house for its taxable value, and you may have a basis for devaluing your property - but that is certainly not either easy or given.

Now, on the other hand, your house's real salable value will depend on how desirable it is. A flawed 4 bedroom house will tend to cause people looking for 4-bedroom houses to look at other 4-bedroom houses. A good 3-bedroom house well tend to be the one that people looking for 3-bedroom houses look at after they look at 3-bedroom houses that are flawed, so your time on market will be shorter and you would tend to have a greater chance of having competing bids. A house on the market a long time tends to get prices dropped a lot.

Our house in Clawson had refinanced based on an appraisal of $200k before the work we were financing with the remodel. Over the course of 14 months it was on the market before it was taken posession of by the bank in foreclosure, we ended up with one offer for $140k, but the buyer walked when the bank counteroffered $160k on the short sale application. We've learned that the bank sold the house 2 months after taking possession for $125k. We had feedback from showings that frequently mentioned they didn't like the master bedroom layout.

Our house in Indiana got an offer after being listed 2 weeks, and a second higher offer 1 week after that. It was still a shortsale, but that was market condition related because there were a lot of foreclosures to compete with.

In summary, I think that losing a bedroom can very well be justified as a positive for your house's real-world resale value, and only in the theoretical world of home value is it possibly going to reduce your value - and in that manner, it is (if anything) actually to your advantage.

Now, theoretical loss of house value could be a problem in terms of refinancing, but only if you're bumping up against an equity issue. If that was to be happenning, though, I think it's probably something where you really need to remind yourself the pitfalls of having small or negative amounts of equity, and maybe not refinancing would be more prudent anyway.
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Old 07-23-2011, 10:14 PM   #6
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Loss of house value by losing a room?


Genereally, you are correct to be concerned about reducing the number of bedrooms. This would be especially so if dropping from 3 to 2. Howecer, I think in your senario that the improvements will offset the reduction to 3 bedrooms.
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Old 07-24-2011, 07:42 AM   #7
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Loss of house value by losing a room?


Quote:
Originally Posted by sgt_utz View Post
I'm in the Air Force stationed at Travis AFB. The plan was to buy the house, fix it up, and sell it in 5 years when my enlistment is up as an investment. If the value hasn't gone up by then, I'll stay here until it does or rent it out. So that's the only reason I'm worried about resale value. My wife and I want to move back up to Oregon when I'm out of the military
House values at this time are "going up" in very few places. For most people, not having it go down is all they can expect.
I'd do what you want with the house so you can enjoy it now.
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Old 07-24-2011, 10:34 AM   #8
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Loss of house value by losing a room?


Have you determined a cost to do the change? I Don't mean DIY I mean do you have a contractor that has drawn the new layout and have you picked the materials out? It can be a costly change are you going to get the money out of it in the time frame you are looking at? Sit down and do the math before you take the walls down, you will have a lot of cost most bath remodels done properly will be around $20,000 without moving walls.
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Old 07-24-2011, 12:36 PM   #9
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Loss of house value by losing a room?


Quote:
Originally Posted by sgt_utz View Post
I'm in the Air Force stationed at Travis AFB. The plan was to buy the house, fix it up, and sell it in 5 years when my enlistment is up as an investment. If the value hasn't gone up by then, I'll stay here until it does or rent it out. So that's the only reason I'm worried about resale value. My wife and I want to move back up to Oregon when I'm out of the military
Hi neighbor, I'm in Fairfield. Sounds like you just bought this house? Considering how extremely hard this local market was hit and what you likely paid for the house, I wouldn't be too overly concerned with loss of value by losing a bedroom with the type of changes you're planning on making. I see a fair amount of folks with the same ideas considering how some of these houses were designed, as you say squeezing rooms into square footage to the point that some of layout makes little sense as to useability. My guess is that the positive changes to useability may very well offset the loss of a bedroom for what future buyers will be attracted to. I don't expect too much increase in house value around here in the next 5 years but am hopeful that we'll at least see an end to the plummeting prices and a noteable (not huge by any means) increase again.
Considering I own three homes here I also wouldn't be disappointed in the least to see decent gains in that time either
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Old 07-24-2011, 12:53 PM   #10
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Loss of house value by losing a room?


Welcome sgt_utz, to the best darn DIY'r site on the web.

Sounds similar to the place I redid last year, my wife and I had (2) places a condo and a house in the country. Sold the house in the country and redid the condo.

Originally the condo was (3) bedrooms 1 1/2 baths the main bath was a small 5 x 10, I made the smallest of the (3) bedrooms into a 9 x 10 modern bathroom and the 5 x 10 bathroom into a walkin closet. Something you may want to consider when planning the changes in your place.

Like many infront on this post have mentioned, I may have well reduced to OA value of the condo, but I know I have increased the sale ability of the place by bringing is up to date. In todays markets it is really difficult to think of property as investment, who knows when the values will return if ever.

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