One additional bedroom — and the privacy it provides — can make all the difference to your space needs. You could use the add-on to give each of your kids their own bedroom, or turn it into the home office of your dreams.
But any kind of house addition will be expensive and time-consuming. The renovation will also turn your cozy home into a construction zone until it’s finished. It’d be helpful to know, beyond personal enjoyment, how much value does a bedroom add?
“The number of bedrooms does have a great impact on the sales price for smaller homes, if your bedroom addition adds square footage,” advises top-selling Fort Worth Texas real estate agent Lily Moore. “I would say that another bedroom can add another $8,000 to $10,000 to your list price.”
That’s a good chunk of change! However, determining added value for your specific project requires digging into the specifics, including:
- how the new bedroom impacts your home’s layout
- whether the new bedroom adds square footage
- how many bedrooms are common in the homes in your neighborhood
- what local buyers are looking for
Let’s explore why these factors matter and how to account for the value-add of a bedroom in your market before you embark on this project.
What are my options for a bedroom add?
Homeowners have three options to consider when adding an extra bedroom to their house: convert existing space, build an addition on your ground floor and add a second story, or expand your existing second story.
1. Convert an existing space
If you already have the space for another bedroom in your existing square footage, such as in your basement or attic, it’s beneficial to convert the space before listing your house. It’s relatively inexpensive to convert the existing space, yet you’ll still pull in extra money for the added value of having another bedroom — if the converted space legally qualifies as a bedroom.
“In Texas, a bedroom addition or conversion must have a window and a closet in order for an appraiser to count it as another bedroom. It also needs to have enough space,” says Moore. “I’ve seen people add bedrooms in very small places that barely have room for a bed and no space for a closet. Those spaces may technically be usable as a bedroom, but they cannot be listed as a bedroom and they won’t be counted as a bedroom by the appraiser.”
There’s no clear-cut answer as to what qualifies as a bedroom because building codes vary from state to state. However, most states require that bedrooms have at least 70 square feet of floor space and a window to provide lighting, ventilation, and a means of escape in case of an emergency, like a house fire.
2. Build on a ground-floor addition
Building out on the ground floor is what most homeowners envision when they consider adding a bedroom addition to their home. This option is appealing because it’s not just reconfiguring your existing space, it’s adding square footage — and more square footage typically equals added value.
However, when you add a bedroom addition onto your ground floor, the added square footage has to come from somewhere.
Bedroom space is more valuable than yard space
Before you consider building a bedroom addition on your ground floor, you need to assess how the addition will impact your yard size.
“The square footage of a lot is an important part of a property; however, vacant land tends to be significantly less valuable than improved areas in most instances. For this reason, it is generally a worthwhile trade to sacrifice your lot area if it means expanding the square footage of a home,” says Missouri-based real estate appraiser Mason Spurgeon.
…But small yards can hurt marketability
However, if your property is all house and no yard, that’ll make it harder to sell. And houses that sit on the market for too long typically sell for less when they finally find a buyer.
“If you do have a large enough yard to expand your home’s square footage, that’s definitely going to help you get a positive ROI of around 50% because you’re increasing your house size,” advises Moore.
“But if you already have a small yard, please don’t make it smaller by adding another bedroom. Most buyers want to have space outside where they can have coffee in the mornings, or let the kids and pets run around. In the past, I’ve had listings that I couldn’t sell because they didn’t have any yard space.”
Will the house flow?
Finally, when you consider a ground floor bedroom addition, you need to determine if you can add another bedroom in a location that makes sense. If the only available spot for your bedroom addition is right off the kitchen, or requires walking through another bedroom to access it, that will diminish any added value in terms of square footage.
3. Add on a second story or expand your existing second story
Single-story homeowners don’t always think of expanding upward when they consider adding on a bedroom, and there’s good reason for this. Adding a second story or taking the roof off the single-story section of your house and expanding the second floor is a major undertaking.
Most single stories aren’t built to support the weight of a second floor, so adding or expanding floorspace upstairs requires reinforcing the walls and foundation of your first story. Unlike a simpler ground floor addition where you can simply cordon off the construction area, this major renovation requires adjustments to the whole house, which means you’ll need to move out for a while.
While adding or expanding your second story is expensive and inconvenient, there is a silver lining. This option lets you expand your home’s square footage without reducing your yard size, which will pay off when you’re ready to sell.
What’s the typical cost to add a bedroom?
The three main options to add a bedroom to your home come with very different price tags.
Cost to convert existing space
The cost to convert an existing space into a bedroom all depends on its current condition and location.
Let’s say you’re simply closing off a bonus room in a house with an open layout. All the space needs is a non-load bearing interior wall, a door, a built-in closet, and electrical work, such as additional outlets or perhaps a central ceiling light for the newly formed space. That will run you an average of $3,300. If the space needs an exterior window added to qualify as a bedroom, add an additional $1,000 to $5,000 to the price tag.
The cost goes up if you’re adding your bedroom to a space that’s currently unfinished, like your basement or attic. No one wants a finished bedroom addition that can only be accessed through an unfinished area, so you’ll need to refinish your whole basement or attic area to connect the bedroom area to the natural flow of the house.
Homeowners with full basements (meaning they are the same size as the above grade/above ground square footage of your house) are looking at an average cost of between $18,000 to $21,350 to refinish a full basement that measures between 1,200 to 1,500 square feet.
Cost to add a ground floor bedroom addition
The cost for building out another bedroom as a ground floor addition to your home is more straightforward. Addition estimates are based on a price per square foot model, ranging between $80 to $200, depending on construction costs in your area.
On average, a bedroom addition will run you between $10,300-$24,900. A number of factors influence how expensive your ground floor bedroom addition will be, such as the difficulty of creating access to the space, and the grading of the land where your addition is going.
For example, let’s say your bedroom addition will be built on flat ground with access to the house created by expanding an existing window already framed out to accommodate any load bearing issues. That addition will cost less than if it were located on a slope that needed to be built up to support the new foundation, and if the doorway needed to be cut and framed into an existing solid wall.
Cost to add or expand a second story
Many homeowners experience sticker shock when they look into adding a second story or expanding their existing second story. In some areas you could buy a second house for what it costs to add an upstairs to your existing home.
If you want to add a full second story to your 2,000 square-foot house, that is going to cost you between $150,000 and $200,000. Adding just a partial second story that measures between 500 to 700 square feet will cost you around $90,000 to $120,000.
That may sound expensive, but consider all that you’re getting for your money. If you’re going through the trouble to add or expand your second story, you’re not just adding a single bedroom, you’ll also be adding an extra bedroom and extra storage. However, don’t forget the staircase you’ll need to account for to access the area.
How does an extra bedroom affect my home’s value?
There are two ways of looking at the value that an additional bedroom adds to your home: list price value and appraised value.
Most sellers think in terms of how much more money they can ask for when listing their home for sale. However, when it comes time for your sale to close, it’s the appraisal value that really matters.
Both values are pulled from the same data, such as nearby comparable properties (comps). However, sellers and their agents approach the data differently than an appraiser who’s evaluating the property’s value for the mortgage company.
1. List price value add
When determining how much to list a house for, sellers and their agents approach the added value from the perspective of how much they can get a buyer to pay for an extra bedroom. That depends largely on what’s going on in the local real estate market, and what the buyer demand is for properties with different numbers of bedrooms.
“In the Dallas market, two bedroom, one bath homes aren’t popular, in part due to the pandemic. Most buyers are looking for three or four bedrooms now that so many people are working and attending school from home,” explains Moore.
In that vein, Moore estimates adding a bedroom in her market could help a home fetch $8,000-$10,000 more. But that’s specific for her area. You’ll need to account for your own housing environment before you can make that calculation.
2. Appraised value added
For appraisers, it’s not the number of bedrooms that matter, but the amount of square footage that impacts a home’s value. While this does vary from market to market, typically a bedroom addition adds appraisal value only if it increases the square footage.
Spurgeon breaks it down for us as follows:
“Any time you expand the square footage of a home it will increase the value. And most market participants are more concerned with the overall square footage of a home than with bedroom counts. While a four-bedroom home may appeal more to the right buyer than a three-bedroom home, there won’t be much of a difference in terms of value in our rural market.
“While remodeling an already-finished area to turn it into a bedroom likely won’t increase the value much because it is the same square footage in our market, increasing the bedroom count can be a defining factor in more urban areas.”
Bedroom count may not move the needle much for appraisers when it comes to determining their valuation, however it can impact which comps they pull.”
Both agents and appraisers are going to start their valuation process by pulling the sold prices of recent home sales in the neighborhood, and to pull those comps, they’ll look at both square footage and bedroom counts. That can pose a problem if your bedroom addition makes your property unique in your market.
For example, let’s say your home is in a neighborhood with mostly three-bedroom properties. Your home already has four bedrooms and more square footage than your neighbors. In that scenario, a bedroom addition may make it difficult for agents and appraisers to find comparable properties.
“Getting an accurate valuation can be difficult if your home is much larger than others in your area. Appraisers can’t go past two miles to pull comps, so if no homes as large as yours have recently sold in your area, you’re going to have a hard time selling it,” explains Moore.
Will an extra bedroom help bring in more buyers?
Not all added value can be calculated in dollars and cents. In some cases, another bedroom may be just what you need to bring your house in line with the competition, especially in the pandemic age when so many people and their kids are working and attending school from home.
An extra bedroom stands out if you’re the only four-bedroom house in a three-bedroom community, and will likely net you a few grand more than your three-bedroom neighbors. But that doesn’t mean you should go throwing up walls to create as many extra bedrooms as you can.
One bedroom too many?
“Sometimes, it’s not a good decision to add another bedroom to your home. For example, I had a client trying to sell a huge, six-bedroom house in a community where most of the homes have three or four bedrooms,” recalls Moore.
“Those extra bedrooms and additional square footage didn’t help those clients. They ended up selling for almost the same price as a four-bedroom home because buyers looking in that area were concerned about the cost of electricity for such a large home.”
Avoid the risk of “over” improving
Both agents and appraisers are on the same page when it comes to tacking on bedroom additions and extra square footage to a home that’s already large for their market.
“Any time you go above and beyond what is typical for a neighborhood, there is the risk of over-improving the home. Over-improvements are typically improvements that homeowners complete which most buyers are unwilling to pay extra for. The increase in value is rarely equal to the cost in the case of over-improvements,” explains Spurgeon.
Is adding a bedroom a good investment?
Adding another bedroom can be a big benefit to your family in the short term, and it could pay off big time down the road when you’re ready to sell your home. However, there is no easy answer for whether or not adding another bedroom onto your home is a good investment. Sometimes it is a good investment, and sometimes it’s not.
The only way to really tell is to call a real estate agent to get their opinion on how a bedroom addition will impact your home’s value. The good news is that you can reach out to an agent for advice, even if you’re not planning to sell.
“Real estate professionals are always available to tell you if it’s worth it to add a bedroom to your home. I get those calls on a weekly basis from homeowners, and there’s no charge for that. We just hope that when you’re ready to sell in the future that you’ll reach out to us,” says Moore.
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