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Should You Convert a 3-Bedroom Home Into a 2-Bedroom Home?

[Updated: Mar 31, 2021 ] Mar 05, 2021 by Barbara Zito
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If you have a three-bedroom property where one of the bedrooms is on the small side, it might be tempting to knock down some walls and reconfigure the space. Perhaps you've got some ideas for combining two rooms into a grand master suite. Maybe you want to have more of an open floor plan to enjoy more common space. Whatever your plans are for getting rid of that third bedroom, read this first.

Losing a bedroom will decrease the property value

According to Realty Hop, the median price of a three-bedroom home in the top 100 U.S. metro areas is $246,321, while a two-bedroom home is $178,650. That's a difference of more than $67,000. While this data only takes the number of bedrooms into consideration, not overall square footage of the home, $67K is still enough to give an investor pause before converting a three-bedroom to a two-bedroom.

Your pool of buyers will diminish

Some homebuyers will view a two-bedroom property as a wise investment for a starter home. Others will appreciate the chance to downsize from a larger home to one where they can more easily age in place during retirement. And others will see a two-bedroom home as a chance to upgrade from an apartment or condo to a small single-family home.

But what about everyone else? By taking out that third bedroom, you're missing out on a wider demographic of homebuyers, particularly families with more than one child. It's impossible to please every buyer, of course, but by removing a desirable feature like a third bedroom out of the equation, you'll lose out on a huge segment of homebuyers.

Another way you'll miss out with homebuyers is that your property could get lost among other online real estate listings. House hunters typically search real estate websites by the number of bedrooms and bathrooms, not the amount of square footage. So while your home might be the same overall size as a nearby three-bedroom comp, it won't come up in the search results.

The pandemic has changed homeowners' needs

When the pandemic transformed our homes into offices and classrooms, there was a mad scramble to find space for families to spend workdays and school days all under one roof. Open floor plans, once coveted for their spacious flexibility, have made it difficult for people to find privacy to work or study now that everyone is home.

The moral of the story? Now is not the time to be removing a room with a door that closes. Whether that third bedroom is used for sleeping or as an oversized walk-in closet or a home office, leave that decision to your buyers.

The bottom line

While spacious bedrooms are a hit with homeowners, a small bedroom is still a room with a door that closes. Privacy can be difficult to come by at home during a pandemic, so it pays for investors to keep even tiny rooms as-is for resale. No matter how tempting it is to open up your floor plan, it's best to keep that third bedroom intact if you want to attract more buyers and earn a higher ROI.

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