Stuff To Consider Before Building An Addition Onto Your Home

Some homeowners are convinced that they need more space, and glance through their walls with visions of new rooms dancing in their heads. The trigger-happy subset of these folks jumps into these projects with abandon, certain that the addition will “pay for itself” by upping the value of the home. But in a housing market like this, such assumptions can be faulty.

Appraisal Today provides some thoughts for homeowners to work through before they go ahead with their add-ons:

* Decide why exactly you want the addition. Tailor the room to your needs. Make sure you’re not needlessly overspending by making the room too large, and determine whether or not a move would make more financial sense.

* Realize that doing this could make your life hell for a while. Your privacy will be invaded by a crew of workers who make a lot of noise, forcing you to adjust your routine. Don’t commit until you know how long the project will take, and whether or not you can stomach that length.

* Survey the red tape. You may need to contact the county, city and neighborhood association to get approval, and the length of the process could put a crunch on your desired schedule.

It also wouldn’t hurt to speak to a real estate agent to get an idea of how much value the addition might add to your home before going through with it.

How to make the most money on your home addition [Appraisal Today]

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  1. sirwired says:

    Consider selling the house and moving. My wife and I considered adding a two-car garage with bonus room overhead. We had an architect come out and design it, and had a contractor price it out. It was going to require months of paperwork to get a zoning variance (it was going to be four inches over the setback on one corner), cost $100k, and take months to build. We’d have to live in an apartment while the work was going on, due to the work being done. The driveway was going to have to be relocated, as were the utilities.

    We just sold the place and moved… that was a LOT easier, and gave us something better than a tacked-on addition.

    • bhr says:

      If you can get out of your house for the right price then it is almost always a good call, especially with the market depressed in a lot of areas. Anything more than a deck/sunroom is going to be costly and time consuming (and potentially hurt your resale more than it costs, despite what the reality shows show)

  2. D007H says:

    In before the “in before_____” or “I _____mine at home” comments…. love, captain obvious

  3. backbroken says:

    “Decide why exactly you want the addition.”

    -Insert joke here.

    (It’s Friday afternoon and I can’t be bothered. But somebody ought to.)

    • missy070203 says:

      because if it’s to house your extensive porn collection – maybe going digital could be less costly

  4. vliam says:

    How ’bout “have you finished paying off the existing piece yet?”

  5. milty45654 says:

    Kind of out of touch here no? High percentage of homeowners that still have homes are underwater; credit is still not flowing, the economy is in the dumps….yeah, let’s go get another loan to add more to the money pit….right

    • Taliskan says:

      For growing families, it may not be reasonable to sell their current house, but it may be cost effective to expand. Just from seeing houses grow the past 5 or so years, more people are staying put and adding on. Seems reasonable to me. I love my house, it has not lost value, I love my neighborhood. Once I have enough principle paid off, I can see myself expanding the second story. And if this is the house I choose to die in, POOL/SAUNA ROOM AND THIRD STORY :D

    • crispyduck13 says:

      Who said anything about a loan? An addition does not have to cost $100k. Selling/moving is not free, especially when your home is “under water”. I’m not going to stop improving my home just because a bunch of realtors value it lower than I paid right at this particular moment in time. That shit is going to change.

      As long as your house is doing a good job of housing you and you can continue paying for it I don’t see why one would just let everything go to hell or continue being miserable living in a too small house with young children (example).

    • Rachacha says:

      We put on an addition several years ago. When we purchased our home, we had no kids, and we were living in a small apartment, so we purchased a home that we thought we would grow into, but we underestimated and found ourselves looking for more space for our family as well as 2 side businesses that we started. At the time, the real-estate market was still climbing, and we owed only about 50% of our mortgage. The prices of larger homes were way overpriced, and we did not want to put ourselves into what we felt was a volitile market (2 years before the crash). We decided to build an addition.

      This allowed us to stay in our home for several more years, and wait to find the perfect piece of land for a more reasonable price to build our dream home where we hope to stay until after we retire (still another +25 years).

      While there are many people who are underwater, there are many more who are paying their mortgages off early, and who are far from underwater. For these people, an addition might be the better option.

    • beachmouse says:

      The flip side is that if you aren’t underwater, the GCs and their services are frequently a lot more reasonably-priced now than if you were trying to build or add on during the peak of the boom. They actually really do need your business now.

    • austintatious2626 says:

      What you fail to realize is that said Money Pit may not be generating value the way it should even after improvements and in order to make it functional for a growing family you need to tack on the extra to make the home work. Eventually property values will rise again, and when they do then that addition depending on what it is could make the difference between selling for 75,000 and selling for 100,000.

  6. crispyduck13 says:

    I can’t believe “Increased Property Taxes” are not on here. Next to the cost for the actual construction this is the biggest financial hit you’ll take for the project.

    • Rachacha says:

      As long as you are not living in a a neighborhood where after the addition you will be almost double the average home size of your neighbors, the increased taxes will be minimal.

      We put on a 500sf addition to our home, and after doing so, we were only about 100sf larger than the average home, and still well below the largest home in our neighborhood. Our tax assesment increased about $30/year (about a 1% increase)

      • crispyduck13 says:

        That’s really interesting. So the tax hit you would take is on the square footage in excess of the township/county average? I really don’t know how they calculate that crap.

        • edman007 says:

          Some states like NY don’t calculate the tax based on the assessed value of your house, but instead of the assessed value of your house divided by the assessed value of the entire taxable assessed value of all property in the jurisdiction. It’s a bit more complicated but it basically divides out the market meaning they don’t have to adjust for it when determining a tax rate. It also means if anyone in the area does an improvement it actually reduces the tax rate (making zero impact on the towns income). Conversely if the market sucks and everyone goes out and gets their house re-assessed trying to lower their taxes the tax rate increases which negates a lot of that re-assessed value.

  7. dolemite says:

    Wife and I are considering this in the future. Maybe 5-10 years from now. Mortgage was for 90K, but the house is appraised at 120K. An addition will probably run around 30k, so we’d at least get our money out of it. We could also sell it, take the 30k to put towards a bigger house, but we like the neighborhood. Seems like either way, you will be losing the 30k.

  8. Rachacha says:

    We put an addition on our old home. My comments after this process:
    1) Make sure that after you build the addition you are not significantly larger than the rest of the homes in your neighborhood. This will almost guarantee that you will not get your investment back.

    2) Withold the last payment to your contractor until you get your use and occupancy permit. Make sure that the last payment is significant enough so that he will have an incentive to finish the job and resolve all permitting and inspection issues.

    3) Keep it simple. We put our addition on the back of our home, and used doors and windows that used to go outside as the new entry ways into the addition. This allowed our contractor to keep the addition closed off from the rest of the house until most of the messy work was complete which kept the house secure and kept the dust down.

    4) While it is nice to tailor the room to your needs, be careful not to make the room so specific that it would be difficult to use it for any other purpose when you go to sell, or should your needs change.

    5) To make you addition feel like the rest of your home, keep the quality and look of doors, trim and flooring consistent with the quality of your existing rooms. ie, if you house is 1970s dark paneling, and your kitchen still has lime green formica countertops, don’t make your addition ultra contemporary unless you also plan on refurbishing other rooms in your house to match the style. Also, think about taking advantage of the different trades people you have in if you need to do some other repairs in the house. If you have a pesky crack in a ceiling that you can’t seem to fix, talk to the drywall contractor to see if he can quote you on the side to make a quick repair.

    6) Once you settle on a design, try not to make significant changes as it will increase the cost and delay the completion of your project.

    • Ducatisti says:

      Good, solid advice.

    • ellemdee says:

      I’m considering an addition and #3 & #4 have been driving my design ideas. I have an existing sunroom which I never use off my small kitchen and I would like to make it part of the house. If I can use the existing slab I would save me the expense of having to pour an additional foundation. A doorwall currently connects the sunroom to the kitchen and simply removing the door would be thousands of dollars cheaper than having to reconfigure my kitchen cabinets for a larger opening. I also hope that this would allow the bulk of the work to be done without the contractors having access to my actual house.

      I’d tile it the same as the kitchen and put in lots of windows so future owners could use it as a dining room, family room, or year-round sunroom.

      As much as people want to maximize ROI when remodeling, housing values have tanked so much in my area that I’d go into the project assuming that my “return” would be the additional enjoyment I’d get out of the extra space and any increase in the future selling price would just be a bonus.

      Taking advantage of tradespeople for other small tasks is a great tip. I walked up to some tree trimmers who happened to be working in the area and got them to trim a tree for me for $40. He said normally they wouldn’t even show up for less than $250.

  9. He says:

    As buyer of an house with an addition done by the previous owners, I would add:

    Make sure you aren’t removing crap on the outside that you might not notice at first like hose bibs on one side or really useful outdoor electrical outlets.

    Don’t block off crawlspace vents without planning for the ramifications of the extra moisture.

    Read the code and make sure your cheap small windows are legally acceptable for your new bedrooms to be called bedrooms. An adult is supposed to fit through them.

    • crispyduck13 says:

      Your GC should be handling code related stuff, and keep you in the loop about changes to the design to maintain code. I guess that is my biggest recommendation:

      *Hire a GC with a spotless reputation.*

    • Liquid-X says:

      As far as the windows thing goes, make sure you don’t cheap out on your windows, as they can affect your heating/cooling needs.

  10. Happy Tinfoil Cat says:

    Just went through the appraisal process yesterday and was surprised at what is valuable and what is not. For instance, I thought having a lot size that is double the neighbors’ lots (& 3X usable space) would mean something in Silicon Valley, $11K. It’s just square footage to them, same with interior living space. On the other hand, even if your house is at the very end of a long cul-de-sac it doesn’t much matter, when 10 feet of the of the several hundred of foot perimeter is a soundwall of a 4 lane road, -$50K value. So a house that had the exact same plan, same project, whose entire back yard is a very loud freeway and has half the lot size just sold for $112 less than my appraisal.

    • Bibliovore says:

      Is the freeway wall’s value detraction due to the yard’s boundary, or the freeway’s nearness? That is, if you did a fencing/landscaping/soundbreak project that separated the rest of your yard from the soundwall section (essentially removing some of the not-very-valuable square footage from the yard), would that change the detraction value of the freeway soundwall? Or is the value reduction based on the freeway’s physical distance from the house?

      • Happy Tinfoil Cat says:

        Physical location, the appraiser asked which street was on the other side. The other house in the neighborhood is so loud you can’t hold a conversation. If that one little corner was not touching a 4-lane street, he would have not deducted $50K

  11. jp7570-1 says:

    Some of this also applies to remodels (no additions). In some states, residential contractors are not regulated, so any yahoo with a toolbelt can claim he is a “contractor”. It will add stress to your life, and possibly a financial drain. It will also completely dominate your living schedule if you plan on staying at the house while the work is being done.

  12. Happy Tinfoil Cat says:

    After reading the article’s advice on finding a smaller home in a nice neighborhood of larger homes, I’ll throw in another tidbit. A friend of mine did just that, finding a very quaint older home with a small vineyard in an upscale community. His troubles started when he went to remodel to add more space… it turns out it was on the National Register of Historic Places. You cannot believe the red tape involved. Then when he added an elevator for his ailing mother-in-law, red tape went to insane levels.

  13. scoosdad says:

    I’m pretty much at my limit for my lot size now.

    I often wish I could just excavate beneath the footprint of my townhouse with its already tiny yard, and put a fourth level in below the existing garage and ground level front entry (it’s sort of set into a hillside so the back end of the ground level is below grade). Man, could I put that space to good use as a workshop, storage, maybe an exercise room. But the challenge of excavating under an existing two family, three story structure and keeping it from collapsing is too much to contemplate.

    I see Mike Holmes freak out when a plumber or an a/c contractor cuts through a floor joist. He’d want to lift my entire house up in the air with a crane for a week in order to install a totally new foundation, I’m sure.

    • GreatWhiteNorth says:

      Strange you should say that. I put myself through university building poured concrete foundations and a couple of them were under existing homes. The existing structures were jacked up and supported on steel I-beams giving us enough clearance to did the hole. Once dug there was plenty of room to work and the jobs went very quickly. We went from empty hole to footings (with a day for initial setup) to forming, poring and stripping by the end of the week. The cure time for the foundation could delay subsequent work (21 days to reach full strength), but I imaging the process of getting the house settled back down could start about a week or so after the pour.

      Of course I have no idea how disruptive it was for the home owner or how much time the prep work took prior to my arrival, or how long after my crew was done it took to get the house fully functional. But the actual concrete foundation part took a week.

  14. JiminyChristmas says:

    The most important takeaway from the article: What you spend on an addition almost never represents a dollar for dollar increase in the value of the house. The return is typically around 65%. Certain interior renovations can yield a much better return or break even. As a rule of thumb, kitchen and bath upgrades have the best ROIs. Improving a house that is already decent has a lower return than an upgrade that addresses a serious shortcoming.

    The other suggestion I would offer is: Figure out if changing the existing layout would serve your purposes just as well as adding square footage. When a house isn’t working for them, people often jump to the conclusion that they need an addition, whereas they really might not.

    Additions include a lot of expensive things: sitework, foundations, exterior finishes, roofs, city plan review – that interior remodels do not. If you can make something work within the existing footprint of the house you will get a lot more bang for the buck.

    • Bibliovore says:

      To this I would add that while ROI is nice, part of that isn’t in dollar value: it’s the return in living value that you get out of the remodel/addition while you’re still living there. I can’t tell you how many times I’ve heard about people who’ve remodeled a problem away because they felt they needed to in order to sell their home, then been sad that they didn’t do it years before while they could enjoy the great change they just paid for.

  15. Ihaveasmartpuppy says:

    We put an addition on our house so I can add a couple:

    1. Make sure the workers don’t cover your (working) chimney with a tarp during the heating season, nearly killing you and your family one rainy night with carbon monoxide. Make sure you have working detectors (we’re alive because we did).

    2. Don’t double the size and value of your house 6 months before the housing bubble bursts.

    If we could do it over, I think I’d pass.

    • Bibliovore says:

      Whoa — glad you survived the contractor’s carelessness. What was their response?

      Are you still living in that house, and if so, are you otherwise enjoying the remodel?

  16. Gregory says:

    Most of the concerns in the article and in my fellow posters’ comments could be addressed by hiring a good residential designer. By “good” I mean one who will take the previously mentioned concerns into consideration and certainly not design an addition 4″ too big for setbacks.

    A good designer will also have a good relationship with the planning department to streamline permitting, and be able to recommend good companies for the build part. Also consider firms who do both; design/build firms.

    And be sure to hire registered/licensed, insured and bonded contractors. You don’t want to be filing a homeowner’s insurance claim when the painter falls off his/her ladder and is disabled.

  17. Snowblind says:

    After costing out what a regular extension would cost, we decided to go with a Sunroom.

    A true addition would have triggered a tax re-assessment (in California anyway) and take our $109K taxed value to somewhere around $450K taxed value. We could afford the addition, but not the taxes!

    We went with a second to finance the work rather than a re-fi for the same reason. A re-fi triggers a tax assessment to the value of the new mortgage as well. Yes, it was 2 percent higher, but with the write-off and a plan to pay it off in 5 years, we came out ahead.

    We picked a local company that developed the first “California tieback” style of sun room and re-roofed the 20 year old roof at the same time so it all flowed together. No appearance of a “wart” hanging off the side of the house. The French doors that once led to the “unusabled in 100+ Central Valley” porch now open into the room. Makes it damn near soundproof when closed up.

    It has it’s own heating and cooling and is currently a play room for my son and his friends. When he gets a bit older I am going to make it a multi-media room with some blackout blinds and a projector/sound system.

    It is right at the legal limit of 60% wall to glass ratio so it feels like a very open room, and the teenagers will get to hang out in there with no expectation of privacy, there are windows on all four sides.

  18. Geekybiker says:

    Looking at houses I can’t tell you how many weird, poorly thought out additions and remodels we saw. If you’re going to remodel, don’t half ass it. Those curtains you’re using instead of closet doors just look trashy when you go to sell it. Adding bedrooms in what used to be an attic is fine, but don’t make the nearest bathroom in the basement. In many cases I’d actually pay less for these houses after all the “improvements” were done.

    • wrjohnston91283 says:

      We saw a bunch of houses like that – an addition that doubled the size of the home, but the only way into the basement was on one side of the house – imagine a U on it’s side – getting from the far end of the basement to the room right above it meant you needed to walk the entire lenght of the basement, go upstairs, and walk the entire lenght of the main floor to be standing right above where you just were.

  19. mydailydrunk says:

    Assume *nothing* when communicating with the GC, even reputable ones. They are not mind-readers.

  20. u1itn0w2day says:

    Things to consider before building an addition…hmmm. The most important is remember that a reality show from the DIY or Home & Garden channel will not be funding or assisting in your renovation. Bells and whistles cost money and electricity. More rooms to heat and cool cost money. The more that can go wrong the more that will go wrong ie now you have more structure to maintain. Always try to have done in good weather, rainy season in the south or middle of winter up north is not the best time.

    Do you really need it or do you want it?

  21. Chiclet says:

    Interesting to hear everyone’s experiences. We’re considering adding onto our house in 5-10 years, maybe add another bedroom, master closet and bath and a family room. We’d like to stay in this house forever, so our resale value isn’t a big factor. I can’t imagine an addition being harder than moving. Moving is the WORST!

  22. Jim M says:
  23. headhot says:

    Make sure you don’t price the house out of the market. If you add on to a house, and then at some point decide to sell it, make sure not to make the house worth more then the market would bare for the area.

  24. Shouhdes says:

    I want Phil to write very article from now on. And I don’t just mean on consumerist. I want my local news to be done by Phil.

  25. FLConsumer says:

    You’re also forgetting the part about finding a good contractor. This will determine the outcome more than anything else will. Check and visit references. I’ve chewed through several contractors over the years, many with great reviews, but their idea of a good job looked half-assed to me.

    A good contractor knows all of the issues you’re likely to hit and will anticipate them and suggest changes you might want to consider.

    A good contractor also knows how to make it as painless as possible. Back when we redid the house, we had an excellent contractor who made sure that no matter what happened, we always had functional bathrooms and a fully-functional kitchen. The poor guys moved that kitchen into 4 different locations throughout the remodel, but we always had a fridge, stove, microwave, kitchen sink, and dishwasher. Often the plumbing and wiring was temporarily suspended by the ceiling, but it always worked.

  26. Awesome McAwesomeness says:

    I have yet to see a good add-on to a house. They always look like add-ons, not to mention, I have seen countless very shoddy add-ons, including my mom’s house. They just never look good, and very often seem out of place or weird. Plus, most people really don’t need as much space as they think. I have a friend with a family of 4. They have a 3500 sq foot house with an unused formal dining and living area, and they want to add on. I have no clue why. She says they are crowded. I know her and her house well enough to know that they aren’t crowded at all. Not only that, they would be fine with about 1000 sq. foot less.