Before you are driven nuts with numbers, Kudos to the Marin Symphony …

Alasdair Neal (stunning conductor), Peter Thompson (president), Renee Rymer (vice pres) … the sponsors, the musicians and a special treat tonight on the piano … Joyce Yang, 2010’s Arthur Rubinstein Prize winner …

Thank you Marin Symphony for a marvelous evening of Strauss, Rachmaninoff, Chopin and Beethoven (Symphony No. 5 in C minor, Op. 67). Another reason to love living in Marin … fabulous music and FREE, no hassle parking.

Now to real estate … Craig … client and reader … asked whether adding a bedroom to his two bedroom San Anselmo home, which he can do easily, would increase its value. Simple answer: Yes, two bedroom homes in San Anselmo averaged $582,067, while three bedroom homes averaged $784,754. And there is an even greater value to homes that have more bedrooms (four bedrooms garnered $1,111,095).

Salient question: Do you make $200,000 by doing a 200 square foot addition? Answer: No

Second question: Why then the added value? Answer: more square footage.

If this sounds like the solution to an SAT problem, oh well, stick with the information …imagine that you, a contractor building at say $50 per square foot, can easily convert a two bedroom home into a three bedroom home. Should you do so?

You just read that two bedroom homes for the last eighteen months averaged $582,067 vs $784,754 for three bedroom homes … and $1,111,095 for four bedroom homes. Sounds like a brain-dead YES … but

Indeed, it appears as though adding a bedroom means your value will increase nearly $200,000 …and by converting a three bedroom into a four bedroom home you’ll hit the lottery…. but…

The answer is simply … NO.

Background: Look again at the last 18 months of sales in San Anselmo …

Averaging 1,151 sq ft, two bedroom homes sold at an average of $516 per square foot … $582,067.

Averaging 1,743 sq ft, three bedroom homes sold at an average of $460 per square foot … $784,754 (10% less per square foot).

And four bedroom homes, averaging 2,492 square feet, sold for an average of $447 per square foot (lower still).

The rub is that the value per square foot decreases as the square footage goes up … until you get into MAJOR homes, MEGA homes and resort like homes.

Hmmmm …. think that an extra bedroom is 150 to 200 square feet. Thus the extra value of the three bedroom home is based on the size, not the number of bedrooms because the three bedroom homes averaged nearly 600 extra square feet.

…. if you add 20% extra square footage to a two bedroom of say, 1,200 square feet… and the value of each square foot declines by 10% … does your work add or subtract value? … does a rock thrown from the train heading east at 70 mph …

I hope reading this points you in the right direction … you’re a statistician, you’re probably laughing … but think before you pound nails … think, are there other considerations? Think, is this good market timing? Think, am I well paid for the lost time at work?

Just for the hay of it … what do you think, appraiser people? I’ll take your answer online or on phone line….

If this little example brings your life expectations to a new level … email me, go to my website or call (415) 637-7974 … let’s have some fun with numbers while you get into liquidity or shop and buy a bargain. There are some great finds out there … and I love shopping (especially for you)!

P.S. Another sale today …. a property mentioned in this blog: 123 Saunders, San Anselmo, just closed escrow … over a year on the market (this time) … started at $1,779,000 and sold for slightly over $¼ M less … at $472 per square foot.

PPS Two could-be family compound homes in Bolinas that you’ve read about are still available… and I don’t know why. Why don’t you call me and let me know (I’ve had three inquiries on the old Full Circle property on Route 1 …

  … count them, nine bedrooms, check out the level acreage … offered by Suzanne Shelhart at the amazing price of $1,349,000) … and I still think 20 Rose with 11 bedrooms, offered by Blanche Streeter at $4,495,000 is totally lovely. Help me here.

Posted by:  Tom Verkozen