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How Much Does Adding a Bedroom Increase Home Value?


newly added modern bedroom

With the outbreak of the coronavirus pandemic, many American families found themselves spending a lot more time at home than usual. With parents working remotely and children attending school from home, all of a sudden they found that their homes weren’t quite as large as they thought they were.

This encouraged many families to look for homes with more space both inside and out.

At the same time, the housing market in many regions across the country was cut-throat and competitive. Many people opted to improve their existing homes rather than jumping into the firey pandemic real estate market.

One way to help make more space in your home is to add an additional bedroom. How much does adding a bedroom increase home value, though? Let’s take a look at what you need to know.

What Are Your Options When It Comes to Adding a Bedroom?

There isn’t just one way to add a bedroom to your home. There is a range of options that span from relatively low-cost and low-impact to high-cost and high-impact.

Designing a Bedroom in an Existing Space

Some people might find that turning an existing space into an additional bedroom is the best choice for them. This might mean using the basement or the attic as the square footage for your new room.

It is generally fairly inexpensive to convert an existing space into a bedroom. So long as the converted space qualifies legally as a bedroom, you will likely make extra money when you sell your home.

The laws about what legally constitutes a bedroom differ between states. For example, a bedroom conversion or addition in the state of Texas must have a closet and a window to be considered a bedroom. This is along with having a certain amount of square footage.

While the laws are not the same between states, it is common for there to be a requirement for bedrooms being at least 70 ft.² It is common to also require a window in order to provide ventilation, lighting, and an additional escape route is an emergency were to occur.

(Wondering how to stage a bedroom to encourage a quick sale? Check out this article.)

Building an Addition on the Ground-Floor

When most homeowners think about building an addition they usually think about building on the ground-floor. This is a way for people to add square footage to their property which typically means that value will be added to the home.

However, it’s important to think about where that extra square footage is coming from when you built an addition. You’ll want to think about how it will impact the size of your yard and whether this could be detrimental to your home’s value.

While more square footage typically means that your home has more value, properties with small yards can be more difficult to market.

You’ll also want to be thoughtful when it comes to your bedroom design. You’ll want to make sure that the house still flows in a natural way and that the addition is not awkward.

Expanding the Second Story or Adding a Second Story

Your last option is to either add a second story or expand the existing second story. If you have a single-story home, it is a major undertaking to do in addition in this way.

You will likely have to reinforce the foundation and the walls of your single-story home in order to build or expand the second story. This is because most single stories simply aren’t built to support that much weight.

This type of renovation requires that you move out for a period of time. This makes it a lot more disruptive to your life than the other two options. (Click here to learn how to sell a house while living in it.)

While it is inconvenient and expensive to expand or add a second story, the good thing about it is that it allows you to expand the square footage of your home without making your yard any smaller.

How Much Does Adding a Bedroom Increase Home Value?

Adding a bedroom can affect your home’s value in two different ways. These are the list price value and the appraised value.

Many people who are selling their homes focus on how much they can list their homes for. However, the appraisal value is actually the most important thing when it’s time to close the sale.

Both of these numbers are calculated using the same information. This includes comparing similar nearby properties. Appraisers and real estate agents, however, approach this information differently.

How Does an Additional Bedroom Affect the Listing Price?

Sellers and agents will consider how much-added value they can receive from a buyer due to the addition of the bedroom. This has a lot to do with the state of the local real estate market as well as what type of property buyers are typically looking for.

By some estimates, the price of a home can go up between $30,000 and $50,000 with each additional bedroom. However, this is incredibly location-specific. This means you’ll definitely want to talk to a real estate agent before making an investment expecting this kind of ROI.

How Does an Additional Bedroom Affect the Appraisal Value?

An appraiser is focused on the amount of square footage in a house, not how many bedrooms there are. This means that the appraisal value will usually only go up with an additional bedroom if it comes in the form of additional square footage. This can depend on the market, though.

The value of a home will go up when you expand the square footage. This means that remodeling an existing room might not have much impact on the appraised value.

There can be a big difference when it comes to urban and rural markets, though. Increasing a bedroom count in an urban area can be more meaningful than in a rural market.

Additionally, adding a bedroom might mean that the appraiser compares your home to different comps which can change the appraised value of your house.

(Did you buy a house that ended up not being the right fit for you? Take a look at this article to learn how soon you can sell it.)

How Much Does It Usually Cost to Add a Bedroom?

The different types of bedroom additions have very different price tags associated with them. Let’s take a look at the average cost you can expect to pay for each option.

Cost to Convert Existing Space

The current condition and location will impact how much it costs to convert an existing space into a bedroom. For example, if you are just turning a bonus room in a house with an open layout into an extra bedroom, not very much work is required. All that will need to be done is building a non-load-bearing interior wall, electrical work, a built-in closet, and a door.

On average, a conversion of that type will cost roughly $3300. If you need to add a window in order to ensure that the room qualifies as a bedroom this will cost an additional $1000-$5000.

If the space you are converting is unfinished that it will cost a little bit more. If you are converting a basement or attic, you will need to convert the entire area so that people don’t have to pass through an unfinished space to get to the new bedroom.

If you are converting a full basement, it costs on average between $18,000 and $21,350 for a basement measuring between 1200 and 1500 ft.²

Cost to Add Addition on Ground Floor

Estimating how much it will cost to add a ground-floor bedroom is more straightforward. For this type of addition, you can use a price per square foot model to estimate the cost. It usually costs between $80 and $200 per square foot depending on your local construction costs.

It will usually cost between $10,300 and $24,900 to build a bedroom addition. How expensive this job is can depend on a number of factors, such as the grading of the land and how easy it is to create access to the space.

Cost to Expand or Add a Second Story

This is definitely going to be the most expensive option when it comes to building an additional bedroom. Depending on your area, you might find that it costs about the same amount to add an upstairs to your existing home as it does to buy a new house entirely.

It typically costs between $150,000 and $200,000 to add a full second story to a house that is 2000 ft.² If you are adding 500 to 700 ft.² to an existing second story then you can still expect to pay between $90,000 and $120,000.

Those numbers are enough to make many homeowners walk away from the idea forever. However, depending on your circumstance, you might find that it’s still the right choice for you.

Does Having an Extra Bedroom Attract More Buyers?

There are other advantages to adding a bedroom beyond the monetary value of your home. You might find that adding another bedroom is a worthwhile investment because it makes your home more competitive in the market. This might be particularly true right now as the pandemic has left many families feeling like they’d rather have more space at home.

On the flip side, sometimes it actually isn’t a good idea to add another bedroom. If you have the only five-bedroom house in a community of three-bedroom houses, you might find that it doesn’t add as much value as you were hoping.

There is also generally a risk of what is known as “over” improvement. If you start going above and beyond what is normal in a neighborhood, it might not pay you back in the way you were hoping. You might find that the improvements you made are not something that buyers are interested in paying any more money for.

It Is a Good Investment to Add a Bedroom?

The answer to this question depends on your particular situation. Maybe your family could really benefit from having additional space and you aren’t planning on selling the home for several years. On the other hand, maybe you are hoping to increase the value of your home which you are planning to sell right away.

Adding another bedroom can be something that increases the value of your home but whether or not this is the case is very dependent on a number of different factors. For this reason, it’s a good idea to get the opinion of a local real estate agent to ask them how they think it could impact the value of your home. You can even ask for the advice of a real estate agent if you aren’t planning on selling.

Is It Time to Sell Your Home?

So, how much does adding a bedroom increase home value?

Unfortunately, there is no easy answer to this question. Whether or not significant value is added to your home has to do with a number of different interrelated factors. It is estimated that the average ROI for adding a bedroom by building out on the ground floor is 50%.

This means that you likely shouldn’t build an additional bedroom just to sell your home. However, if you are in need of an extra bedroom for several years before selling, you might find it a worthwhile investment.

Are you thinking about selling your home but don’t want to deal with all of the headaches associated with listing your house on the open market? If so, find out how much an iBuyer will pay for your house in cash here!

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