Today, Adrian and Ariel discuss their subjective interpretations of the value added –or subtracted, as it relates to features in a home when determining property value.
There are several elements that almost every buyer finds desirable. Things like a walk-in closet, hardwood floors, a two-garage, and an ensuite master bathroom are among them. But what is their dollar value? It becomes very subjective when slapping a price tag on it.
For this exercise, we’re talking about an average, detached 2,000-square-foot home with a double-car garage situated in a newer suburban neighbourhood in Milton.
The Feature: Hot Tub
For some, a hot tub is the ultimate backyard retreat for others a disgusting, run-down bacteria trap. This feature can add or detract from value depending on its condition and overall appeal.
Adrian’s Perceived Value: $3500 to $5,000 if the hot tub is only a few years old, clean, and in good condition. The deluxe, upgraded model would be up to $8,000.
Ariel’s Perceived Value: $0—if not a negative value. He’s not interested in someone’s used hot tub and would have to pay someone to take it away.
However, if it happened to be a newer top-of-the-line model with a built-in waterfall, stereo, motorized tv, and nice lighting, he’d give it a value of $5,000.
Keep this in mind when selling your home with a hot tub; excluding it from the sale or leaving it in the air as a negotiable item may result in you being able to keep it for your next house without losing on the sale price of your home.
The Feature: Smart Switches
Smart switches allow you to customize the lighting throughout your house and control other components remotely and through automation. Even non-techie people can get excited about it and see it as a valuable feature. For the purpose of this interpretation of value, we’re assuming all light switches are smart, and no other devices.
Find out about Adrian’s recent smart-home upgrade 🤯
Adrian’s Perceived Value: $1,000
Ariel’s Perceived Value: $1,000
The Feature: Fireplaces
Who doesn’t love a cozy evening by the fire? They’re great for creating a warm atmosphere and adding extra festive quality for the holidays.
The discussion included three living room fireplace options: electric, gas, and wood-burning.
Adrian’s Perceived Value:
- Electric – $0
- Gas – up to $3,500
- Wood-burning – $5,000 (even if it’s not working because you’ve already got the chimney)
Ariel’s Perceived Value:
- Electric – $1,000
- Gas – $5,000
- Wood-burning – $2,500-$5,000
Heated Driveway
Most people hate shovelling snow. Installing a heated electric driveway means melting all the snow at the touch of a button. When Ariel looked at installing a heated driveway several years ago, the cost was $10,000, plus the hydro to run it for a three-car driveway.
Here’s more about Ariel’s heated driveway story.
Adrian’s Perceived Value: $20,000
Ariel’s Perceived Value: $10,000
The Feature: Basic Finished Basement
The cost of basic drywall, carpet, lighting, and electrical is in the $20,000 to $25,000 range for a 2,000-square-foot home.
The argument is that an unfinished basement is sometimes more valuable than a poorly finished basement. This is why Adrian and Ariel’s perceived value is half or less than the actual cost.
Adrian’s Perceived Value: $7,500
Ariel’s Perceived Value: $10,000
However, if we’ve caught you before finishing your basement, consider these worthy value-adding features:
- Wet bar or kitchen
- Separate entrance
- Larger windows
- A three-piece (or more) bathroom, or a rough-in and enclosed area for future conversion
The Feature: Basic 3-Piece Bathroom in a Finished Basement
Adrian’s Perceived Value: $7,500
Ariel’s Perceived Value: $7,500
The Feature: Central Vacuum
Adrian’s Perceived Value: $1,000
Ariel’s Perceived Value: $0
The Feature: Living Next Door to Your Best Friend
Adrian’s Perceived Value: $20,000 range
Ariel’s Perceived Value: $0
The purpose of this exercise was to show that value is subjective and completely in the eyes of the buyer. As a seller, you don’t want to get caught up on list prices or what your neighbour’s house sells; their own bias on what creates value depending on their individual needs and tastes. Leverage a professional real estate agent who understands the range of perceived value for the individual features in your home; they’ll be able to put together.
Watch this episode of KT Confidential | The Real Estate Podcast below or listen here
