Does a Converted Garage Add Value?
A converted garage may add value to a home. The value added, however may not equal the amount spent on the conversion.
Counting Garage Space as Interior Space
For garage space to add value to a property at the same level as the other interior spaces, it should have the same fit and finish (quality).
The converted garage must also be conditioned space, comparable to the rest of the home. Conditioned space is space that has similar heating and cooling systems (i.e. vents and ducts for air). A converted garage that is inferior to the rest of the home may add value at a lower level than other interior spaces that are included in the square foot measurement of the house.
Value Given, Value Taken Away
You should also know that although the additional interior space may add value to a home (market value, the price a person would expect to receive if the home were sold on the open market), the loss of a garage may take value away.
This can be mitigated by adding a new garage, either attached to the home, or as a detached space.
Garages, attached, or detached, do not count as living space, and therefore do not count in the overall square footage of a home.
Different Areas, Different Value for Converted Garages
Ultimately, the value of a garage conversion is determined by how the market has reacted in the recent past to similar homes with and without converted garages.
Residential real estate appraisers use the Sales Comparison Approach, one of the three approaches to value, to help determine the Fair Market Value of a home. This approach uses data from homes in the same market area (neighborhood) that are comparable to the home being appraised to determine the value of the home. If nearby homes that have recently sold also have converted garages and are otherwise similar in size and condition, this makes the job of determining the value of the garage conversion more straightforward.