Are Your Home Electronics Appraising For Value?

The fact that electronics are like cars and depreciate the moment they’re installed is absolutely true. I dare anyone to argue this point.
How many dealers you know would buy back used equipment for anything more than 1/4 the cost? And thats only if it no more than a few years old and certain items.
Electronics are not part of the home and shouldn’t be considered in an appraisal. It’s like adding the cost of your furniture into the appraisal (and that will keep value a lot longer). The exception being lighting control as these are almost always an integral part of the house and its function.

The structured wiring statement was ignorance on the appraisers part. It IS something in high demand, people DO care about it, and is part of the home.

I should have noted that the speakers are in-ceiling, along with a built-in rack behind glass that I doubt I would remove if I ever sold the house. I think those should be considered permanent amenities, along with the WAP, wiring, and outdoor speakers.

I don’t see how this is a surprise to you? The “real culprit” represents probable 99% of home buyers out there. The bank is looking for a real world price on your house. If they had to sell it in a foreclosure they want to try to recover there loses.  Its only worth what you can sell it for.

Its always been about the number of bedrooms, bathrooms, total squares, and the price of the houses on each side.  The only imenity that has gottten traction outside of these basics are granite countertops - whoopee!

I have to side with John and the other commenters.  Ammenites like home cinemas have always been tangential to a home’s resale value.  Even substantial renovations often add a fraction of their cost to the home’s value, as Jason discovered with the addition.  That’s something bites a lot of amateur flippers in the butt: putting more work into a fixer-upper than they’ll get from selling it.

In fact I sent a letter to CEDIA 3 years ago about this problem, and even offered to donate time and energy and expertise with thier backing to get the appraisal industry to recognize the value of custom installed electronics.  I wasn’t just blown off, I was totally ignored.  They wouldn’t return my phone calls or answer my emails.  Obviously more important things on their plate.

Matt,
I doubt there is anything CEDIA could do about changing the appraisal industry. You would first have to educate home buyers and make structured wiring something they look for, want and most of all need. While these things may help your house appear more appealing to a home buyer i don’t think they are willing to pay more. Like I said before Its only worth what you can sell it for.

No appraisal value, but it helps sell a home faster since a majority of comparable homes won’t have the electronic capabilities of the wired and outfitted homes.

You can use the electronics when negotiating the sale.

Electronics are intrinsic value. They are valuable mostly only to you. The big screens and LCD are easily replaced and who wants to pay top dollar for three year old electronics. See what you’ll get on EBay for such. Wiring is a totally different matter. Try to run it after the fact. But put such on a list of important features that say buy this house and wiring etc will be way down the list. Its only something that a guy who first heads down to the basement to look at the wiring panel who cares. The wife is looking at the awesome granite counter tops. And like buying a used car, its almost totally how it looks as to whether you buy or not.

I can understand that a piece of hardware that can easily be removed when/if the house is sold does not add value to the home. But, to say that a lighting control system, distributed audio, in-ceiling speakers, structured wiring, etc., does not add to the value of the home is ludicrous. The problem is that appraisers are very myopic in their approach - they don’t consider the “intrinsic” value of these systems. There needs to be a standard by which these systems are valued just like granite counter tops, hardwood floors, central vac, etc.

The same thing holds true with cars.  If you buy a car with leather interior, navigation, moon roof, speed sensitive cruise control, and all these options that the dealers charge thousands for, you will only get hundreds for them at resale time, especially if you trade your car in.  Navigation adds like $200 to the value of your trade in Kelly Blue Book, but yet you paid $2000 bucks for it when you bought your car. 

The same holds true for a home, when you are upgrading your house you should do so for yourself and your own enjoyment, don’t do it because you think you’re going to add value to your home or you’re more likely to sell the house.  In this bad housing economy your home will only loose value, not gain value, so again add this stuff only if you’re going to stay in the home for the life of the stuff you’re adding and you want to enjoy it, not expecting to get more money when you sell the home.

I’ve been asking for about a year for some hard data on how much value is added to a home that is fully automated. To date, this is the first article that even begins to address the question and it’s a bit disappointing. We all need to educate realtors, appraisers, and designers on the intrinsic value of good, complete wiring, in-ceiling and in-wall speakers, home theater, lighting system, automation, etc.
I believe that builders are now recognizing the value of home theater in spec homes as I get a lot of work in this area. BUT, they all want it to look and sound great for a very low price. I’m not surprised that appraisers don’t “get it” yet…

Egads!  Some of you must not be either dealers or consumer!  Why would anyone argue that the appraiser is correct to add $0 for pieces of equipment that are worth in some cases thousands?  what difference does it make if they only sell for hundreds on ebay?  Does that make it right to appraise them at zero?  Appraisers aren’t the problem; if there is a guide line for valuing structural wiring and equipment they will use it.  It’s up to an industry to establish what those values are so that guidelines can be written and appraisers can follow them.  Even if I paid $2000 for a navigation system, at least the auto industry has established guidelines to be sure that I get “at least” my $200 for it!  Those who don’t believe, or would argue that there is a rational explanation for why you shouldn’t get some appraised value for your installed audio system must not care very much about either the equipment you sell (or buy) or you must not care very much about your client.  I would prefer to see our industry fight for the right to call the products we sell an investment; it’s cheap value-added at the end of the sale.

Like a swimming pool, an integrated systems value in a home is subjective to the buyer.  To some it has great value, to others its a liabilty.  How can an appraiser reconcile that what to some is a positive and to others is a negative.

Yes, but even a swimming pool gets an appraisal value depending on how nice it looks, whether it works, etc. So too should in-house electronics! I agree with the egads comment… Let’s get some guidelines put together for appraisers.