This is a question that comes up more than you would think. There could be many different answers, so I’ll try to cover each one below.
Converting your garage into a studio, man cave, or whatever, can be an excellent way to add some living space to your home.
Most of the time when I see someone has done this is when they have a detached garage with a large driveway. The owners already find themselves parking on the driveway most of the time, so figure “Why not.”
Converting your garage can be perfect for you at the time, but as with anything, there are always pros and cons.
Pros of converting your garage
Of course, the biggest advantage when it comes to converting a garage is the added living area.
When you find yourself using your garage only for storage, then might as well spruce it up and use it for more. If you have plenty of room to park on the driveway, then go right ahead.
There are always pros and cons with any home renovation. The biggest pro is that your home always looks way better, and the biggest con is that it always costs too much money.
Renovation pros and cons also apply when it comes to home appraisals.
Renovations give your home the added value, but never as much as you spent on the renovations in the first place.
The question is then, are they actually worth it?
We will touch on that in a second. But first, let’s talk about the problems with them and the ones that contribute the most and least value.
But first, I want to note that this is all written from the perspective of an appraiser. Homes sell higher than the appraised values all the time for many reasons. I wrote this article without the bias of outside factors that influence home values.
For homeowners or clients who have limited knowledge of appraisals, here is a list of the different types of appraisal forms that us appraisers typically use. While some of these forms do not apply to every property, these are the typical real estate appraisal forms used by most appraisers in most situations.
Residential Property Forms
Appraisal forms can be divided into a few categories, but the main two are residential and commercial forms. Residential forms are used for residential properties.
Properties that are considered residential properties include: single family homes, condominiums, mobile homes, and 2-4 unit properties.
Interior and Exterior Inspection Forms
The 1004 form is probably the most common and widely used appraisal form for residential appraisers. That is because it is the form for single family residential properties.
The 1004 is used when an appraiser is required to do an interior and exterior inspection. It is typically used when a lender is ordering an appraisal for a refinance or purchase transaction.
The 1073 form is probably the second most commonly used real estate appraisal form for residential properties. That’s because it is utilized for condominiums. It is essentially the same form as the 1004 and serves the same purpose.
However, it is modified for condominiums. This means that it includes fields that relate specifically to the condo project the subject is in, and other attributes that single family homes don’t have.
Exterior Only Inspection Forms
The forms above are generally used if the property has been inspected in person.
These following two forms are for when the property is only inspected from the exterior; what they call an “Exterior Only” appraisal.
These are however both still considered appraisal forms for residential properties.
The 2055 form is an exterior only form for single family homes and it is only used when it is requested by the client. The exterior only single family form is typically used when there are tenants living at the property and won’t cooperate with the owner.
The 1075 is basically the same as the 1073 form for condominiums but like the 2055 above, is for exterior-only inspections.
Interior or Exterior Inspection
This is where it gets kind of confusing.
Although a property is actually not required to be inspected at all to perform an appraisal, these following two forms can be used for either an interior or exterior inspection.
Typically they are used for full inspection appraisals.
Like the 1004 and 1073 forms, the 1004C is also for residential properties, but of a different sort. The 1004C form is for mobile homes. You know, like the ones that belong in mobile home parks.
The 1025 form is a little different than the previous three, but I included it the residential forms section because it is used what is still considered a residential property. That is a 2-4 unit property. Like I said, this form is a little different in that it is laid out with different sections, including rental comparables before the sales comparables and value indicators below the sales comparables.
Now that we have covered the residential appraisal forms, we will get into the commercial ones. Don’t worry; there aren’t nearly as many.
Commercial Property Forms
There are only a few commercial appraisal forms since the majority of commercial properties are appraised with written appraisal reports.
However, if the property is on the smaller side, or the client doesn’t want to pay for an appraisal report, then a form will typically be utilized.
71A & 71B
These two forms are both used for the same type of property, multi-family properties (5 or more units). Both of these forms have the same “skeleton” and come up with the same results, in the same way, the 71A is just a much more in-depth report.
Typically I prefer to use the 71B since it is a heck of a lot shorter and still has the same outcome.
The third and only other commercial appraisal form is the GP Commercial form. GP forms will be explained better in the following section but what “GP” stands for is “General Purpose.”
With this name, you can get the idea that this form can basically be used for any type of commercial property that isn’t overly complex.
I have appraised everything from office buildings, religious facilities and single room occupancy buildings on the GP Commercial form.
It is very versatile and very easy to work with, to say the least.
General Purpose (GP) Forms
Now, to go a little more in-depth with the General Purpose (GP) forms… The GP forms are a great series of forms that include a special form for each type of property.
A lot of times these forms are used when the client just wants to know an estimate of the market value of a property. They are also the forms you would want to use for estate related appraisals.
The GP Residential is for single family properties, like the 1004 form.
The GP Condo form is like the 1073 form, for condominiums.
The GP Commercial form as explained above is for non-complex commercial properties. This form can be used for a wide variety of commercial properties.
The GP Land form is the form that is typically used if the client is looking to find the value of a parcel of land. Usually it is used for residential land, but can also be used for commercial land as well.
GP 2-4 Unit
The GP 2-4 unit is used for income properties that have 2 to 4 units. It is similar to the 1025 form.
The major appraisal forms are pretty much summed up above, but there are some additional forms that serve other purposes.
The 1004D is utilized when a client wants the appraiser to either a) verify that the value has not changed since the effective date of the appraisal, or b) go back and reinspect the property to verify that something has been repaired or replaced.
The 217/1007 forms are used as a supplement to any of residential forms talked about above. These two forms are typically used for rental properties and are used to display rental comparables and a simplified income statement.