Portland Area Real Estate Appraisal Discussion

Portland Appraiser Explains Converted Garage Value
August 26th, 2014 5:10 PM

Appraisal Portland Home Converted Garage

A Portland, Oregon real estate agent friend asked me the following question last week. (The question is edited slightly for clarity.)

If an owner encloses the garage into living space and the project is done skillfully and finished nicely, would the change be considered in the square footage of the home? There is no garage as such, just the finished family room.

The simple answer to this question is that if the typical buyer would see the converted garage area as equally desirable to the area of the rest of the improvement, then it could be considered in the finished square footage of the home. However, one must exercise extreme caution when valuing a property with a converted garage because not all garage conversions add value to a property, and some will actually decrease the value. A few factors to consider when valuing a home with a converted garage are:

1. Has the converted area been finished to the same level as the rest of the improvement? If the original improvement is built with a subfloor and one must step down to a slab floor in this area, then it could be considered as finished to a lesser degree. Also, it is common for garage conversions to be undertaken by amateurs or the finish is not complete and the resultant space often lacks in heating or air conditioning.


2. Has the converted area been legally converted with permits? Often garage conversions are attempted without obtaining the proper building permits. Some jurisdictions may require converting back, bringing up to code, or levy fines. Safety might also be an issue in unpermitted areas due to issues like a lack of adequate ventilation around a furnace or the lack of an emergency exit. I reference here a document outlining the permit requirements in Portland, OR for converting garage space to additional living space.


3. Is there adequate parking for the typical buyer now that the garage has been converted? If most buyers want to have a place to park the car and store things, a converted garage could make it less attractive to the typical buyer. Some jurisdictions have minimum off street parking requirements, making garage conversions a legal issue.

Portland Home Appraiser Converted Garage



This Portland home has a converted garage, but there is a gap between the driveway with some landscaping and a couple of windows, making the converted garage blend with the rest of the house and look more attractive.


4. Does the converted garage look attractive? Some converted garages damage the street appeal of a home, making the house look like the odd duck in the pond.

Converted Garage - Portland Home Appraiser


This Portland Home has a converted garage that lacks windows in the converted area and does not blend with the rest of the house.


5. Are there adequate comparable sales? To credibly appraise a property with a converted garage, the appraiser should have at least one comparable sale with a similar converted garage. Without a converted garage comparable, it is impossible to measure the market reaction to a converted garage in that market. A common appraisal error is to include the converted garage area in the living space and then compare the subject property only to comparable homes that were originally built larger, and do not suffer from the problems often associated with converted garages like bad street appeal, lack of parking, and a floor plan that is out of balance with the overall size of the home (e.g. maybe a large family room in the converted garage and very small kitchen or bedrooms).

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