The saying goes, you don’t know what you’ve got ’til it’s gone. Whoever said those infamous words was talking about having a garage. If you’ve never owned a home with a garage or a detached garage, it might not keep you up at night. But once you’ve had that extra space, a mecca for organization and productivity in your home, you can never go back. If you plan on selling your current home one day and it doesn’t have a garage, put yourself in a garage homeowners’ shoes. It’s a deal-breaker, and the proof is in the resale value.
Whether you’re in the process of refinancing an existing mortgage loan or selling your property, you want your home to appraise at its highest value. One way to help accomplish this task is to build either an attached or detached garage. Buyers view garages as an attractive addition to a home. Having one can immediately boost the market value of your residence.
Detached garages. They’re a big deal. You can have a ton of extra space for both storages and work with them. But beyond just being functional pieces that assist you in being organized and productive detached garages are also important for the overall resale value of your home.
That’s why we’re discussing the significance that detached garages can have on your property value.
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What Exactly Qualifies as a Detached Garage?
Essentially, a detached garage is any garage that’s separate from the house. More technically, this means that the structure doesn’t share either a roof-line or share a wall with the actual home structure itself.
There is an additional subcategory of attached-detached garages in which there’s no shared wall, but the roof-line is shared.
In this article, we will be focusing exclusively on properly detached garages – no shared roof-lines here!
When a Detached Garage Steals Value
Before we get into what detached garages can bring to your resale value, it’s vital we cover how they can detract away from it. Because, honestly, just having an additional structure on your lot doesn’t automatically translate into property gains.
First, you need to consider the overall market and the size of your lot. Detached garages can take up a lot of space – if you have a fairly small lot then it’s probably not a good to pursue adding one; it’s just going to make the layout look cramped.
The same is also true if you live in a highly concentrated and/or highly stylized community. These neighbourhoods tend to frown on these sort of additions, and you’ll likely be running into an HOA that completely denies your capacity to build one.
Second is the overall upkeep of the structure. Having an old and run-down garage isn’t going to play in your favour. This won’t be an issue if you’re planning to immediately add the detached garage prior to selling – a brand new structure is sure to stand out.
But, if you have a detached garage that has been there for some time, then consider investing some renovation money into it. At a minimum, give the existing detached garage a solid, thorough cleaning and a fresh coat of paint.
Maximizing Your Investment
To pursue getting the best return on investment with your detached garage property value, you need to apply some real planning.
First, you need to consider the overall environment where the garage will be. Do you live in an area that has harsh winters? Be sure that the detached garage has a stout and reliable heating system preset if you live in the south where the blaze of the summer – be sure to have an appropriately robust air conditioning system installed.
Second, consider the overall aesthetic of the garage. Be sure to have a fresh, clean paint applied where appropriate and that all the exterior components of the garage are clean. It’s also a good idea to consider incorporating landscaping around the detached garage set to match your own home.
Finally, make sure that the storage layout of the garage is sensible and complete. Ensure that there are no awkward or odd arrangements and that the garage has a solid structure.
So, What About The Actual Value?
Let’s set our expectations before we go any further. Adding a detached garage will come at a cost, and unless you’re pulling some real DIY magic in cutting costs, you’ll probably not earn back the full value of the addition. But, that doesn’t mean it’s a bad investment – especially if you plan to put it into active use for yourself prior to reselling.
The overall national average is that you recoup about 65% of your detached garage’s value during resale. That percentage serves as a solid baseline since many different configurations and sizes are available in detached garages.
It’s important to bear in mind that different markets will have different ROI rates applying though – that national average is just that; an average. Supply and demand are very much at play when it comes to evaluating the worth of your detached garage.
Detached Garage Property Value
Altogether, the property value will significantly increase once you build a custom size garage. For example, if you build a two-car garage or a three-car garage, you will notice that more buyers will be requesting a showing.
Do Garages Add Value On Home Appraisals?
Home Appraisals Matter
In a refinance transaction, most mortgage lenders will require you to have at least 20 per cent equity in your home. If your home doesn’t appraise a high enough value, you might not reach this equity level. If you are selling your property, you want your home to appraise for at least as much as your asking price. If it doesn’t, the lenders working with potential buyers of your property might not be willing to loan these buyers enough mortgage money to meet your asking price.
The Impact of Garages
When determining the value of your home, appraisers consider several factors: They’ll look at what sales prices nearby homes have fetched. They’ll consider whether your home sits in a desirable neighbourhood. They’ll analyze your home’s style, condition and size. They’ll look at any improvements you’ve made to your home. A garage can make your home more attractive to a greater number of buyers. Appraisers will note this and factor your garage into determining your residence’s current market value.
How Much Value Is Added?
How much value a garage adds to your home varies. The cost to build a garage starts at $7,500, with most garages costing much more. On average, expect to spend around $27,000 to build a garage. This will likely up your home’s resale value by about $21,000 for an 81 per cent return on your investment.
Hitch Property Constructions has the biggest range of the garage renovations Melbourne. Check it out here.
Other Garage Improvements
You don’t have to build a new garage to add value to your home. You also can boost your home’s value by making less expensive improvements to an existing garage. You can add a new garage door for about a $1,000-$2,000 installation fee, with an additional $300-$4,000 for the door. Suppose you spend the low end of According to Remodeling magazine’s Cost versus Value Report. In that case, you can expect to recoup about 76.9 per cent of the new door’s cost and its installation in increased value, making it a good investment. At the high end, you’ll get an 85 per cent on your investment for a $2,810 door with $3,300 installation. Compare this with a bathroom remodel, at 64.8 per cent and a backyard patio at 54.9 per cent, and it’s a good deal.
How A Detached Garage Adds Home Value
Before you start spending money, it’s important to do your research and understand how a detached garage adds home value. You can do a lot of things to increase a home’s resale price, and building a detached garage is one of them. But is it the right one? You need to consider quite a few factors before you start spending money on designs or actual work. So how does a detached garage add value, and are they right for every home?
Besides the benefit of keeping your stuff safe, a detached garage adds value to your home because of the additional square footage.
A detached garage is a versatile space. You can use it for parking, additional storage, a gym, home office, workshop, hobby room, or converted living space. The options are nearly endless.
It’s also important to note that many potential buyers may disregard a home from their search depending on your location if it doesn’t have a garage. In some real estate markets, a garage of any kind is a must.
Do Local Real Estate Pricing Research
First, you need to understand that everything having to do with real estate prices is local. Not just in terms of states, counties and town but down to the actual neighbourhood and street address. This type of research is called comps. You can do it yourself by looking up home values around your area.
You’ll notice that houses with a garage will sell for a premium vs. similar houses without one. But how much of a premium will vary based on your location, the value of the home, size, style and design of the home and detached garage.
A Detached Garage Allows For Additional Home Designs
As you’ll see in the picture above, a detached garage allows the home to have a wraparound porch. You can’t have a design like this when you’ve got a garage attached to the house because there’s no way to wrap a porch around the garage.
By detaching the garage, you open up all sorts of creating opportunities, and those designs can then increase home values even further.
By not having a common wall, the one that connects the garage to the house, you have another exterior wall to design on both the detached garage and house. This allows for more things like windows and doors, a deck, patio or porch.
All of these features add home value.
Detached Garage Can Add Storage And Living Space
One of the most common ways to determine the value of a home is by multiplying the average price per square foot homes sells for in the immediate area by the square footage of your living space. Then you can adjust for added amenities like a detached garage, pool, fence, finished basement, central air, etc.
Factors like the age and condition of the property expected amenities in the neighbourhood and the average value of similar homes recently sold in the area will affect whether your property’s price per square foot is above or below market average.
Adding a detached garage adds square footage to the property, and that additional space can have added significant value if conditions are right. Do your research. Below are a few of the guidelines we typically use.
- When a home doesn’t have a garage, and all the other homes in the area do, adding a garage can be a good idea.
- If you buy a house without a garage way below market value, compared the price to homes in the area that have one. If the spread is less than what building a detached garage costs, then it’s a good idea.
- Consult a realtor. They’ll know the local real estate market better than anyone.
- Don’t overdo it. If your home is 1200 sq. ft. you probably don’t need a four-car garage.
- Tailor your garage design to the price point, style, level of finish, and home size.
- If you’re already at the high point of the market, then adding a detached garage won’t do as much.
- Try not to be the biggest and best house on the block at resale.
Increased Appeal To Potential Buyers.
Homes with more amenities are more appealing to potential buyers. And because more people will be interested in the home, the price will go up. That’s basic supply and demand.
When you add a detached garage to the property, you’re increasing the home’s storage space quite a bit. And whoever complains about having too much storage. Some buyers use their garage to park cars and some to store their stuff. Some detached garages include amenities like a gym, office, workshop, loft or even an apartment.
Just as with the home, the more features the garage has the more buyers it can potentially appeal to. Just don’t overdo it.
Transforming The Existing Attached Garage
Many homeowners remodel their attached garage into living space. It’s common to turn a garage into a bedroom, living room, kitchen, gym, home office or mother-daughter sweet. It’s a lot cheaper and easier to add these rooms to the garage since it’s a remodel and not an addition. But then you lose the garage. If you want to regain that lost storage space, then adding a detached garage is the answer.
You get all the additional rooms you need within the old garage area and don’t have to spend a fortune to do it. The detached garage can provide all the storage space you lost by remodelling. And since detached garages are typically less to build than actual living space additions you end up with everything you want for less money.
The addition of a detached garage can benefit you lots of ways, including your finances. And best of all it can increase the resale value of your home.
Looking for Melbourne garage renovations? Look no further. Hitch Property Constructions has you covered.
A Detached Garage Apartment Adds Home Value
Building a detached garage with a 2nd-floor apartment changes things quite a bit. Living space is priced differently than features that are considered an amenity. While a home may sell for $200 per sq. ft., garage space may only be valued at $100. But that apartment will be valued at $200 because it’s more living space. The garage area is still priced cheaper, but that apartment will bring top dollar at resale.
Buyers often overvalue an apartment because of the potential income it could bring as a rental. If the apartment’s legal and can be rented, you could cut your expenses quite a bit.
Another reason buyers like an apartment are flexibility. Use it as a guest house. Move-in your parents, a friend or family member. Whether you use the apartment or not, it’s still nice to have the option, and that extra living space increases home value.
If your home already has an attached garage, that doesn’t mean building a detached garage can’t be a worthy investment. Any home renovation project that increases your overall square footage stands to boost your property value, but creating a detached garage option can free up the attached garage space for a home renovation with an even more significant impact. That attached square footage can be redesigned to function as a master suite, a gourmet kitchen, a theatre room, or family room.
Owning a detached garage has quite a few benefits when compared to an attached one or no garage at all. And they do increase property value. But the amount of value-added depends on several key factors. Make sure the garage fits the value of your home. Get the style and design just right so it becomes an asset. And don’t overdo it. If you’ve got a 1200 sq. ft. home, you probably don’t need a four-car garage if you design a detached garage that’s right for the property then your sure to add a substantial amount to your home value.