Home Theater

Realtor: Home Theater Re-Sale Value Is Undefined

Top L.A.-area real estate agent defines “permanent” components but says there are no guidelines for valuing electronics.

Realtor: Home Theater Re-Sale Value Is Undefined
Jason Knott · February 4, 2009

Home theaters are really cool, but the value of them in terms of selling a home faster and/or for more money is purely in the “eye of the beholder,” according to a top Southern California Realtor.

Indeed, he describes a high-end dedicated theater that buyers wanted to rip out and convert into a wine cellar.

Not too long ago, I complained about the seeming lack of education of my home appraiser. Subsequently, I spoke with Bruce Dilbeck, estate manager for one of the largest real estate agents in Southern California, Dilbeck Realty.

According to Dilbeck, there are no established guidelines on appraising home theaters. He says that there is no formula (like with used cars) for determining the value of electronics in a home based on the original cost of the items.

All valuations are done by comps, the price paid in the local market based on at least three other home sales within a three- to six-month range time period.

Period. End of story.

“My appraiser was clear that there are no guidelines or written rules at all,” says Dilbeck.

“If he deems it personal property he gives it no value, because they are taking it with them, but if it’s built-in and part of the real property, then he tries to determine what the market is willing to pay for it. Often [there are] so many variables and levels of quality, it is tough to state given prices or percentages,” he says.

“Most home theaters, for example, are personal property, but on a real high-end unit that has a drop-down screen with the audio visual built into the wall and it is staying [with the house], the appraiser would attempt to find other houses that have high-end items as well for comparison purposes to help establish the possible sales price, comparing apples to apples.

“But, again, a specific price or value added percentage really is not done.”

Dilbeck says the same logic is done for security systems, intercoms, etc. Flatly, he says no value is assigned for security systems at all, unless it is a high-end system with closed-circuit cameras.

In that case, again, comps are used to determine value.

Does that mean, in essence, a home theater with a built-in Runco VX-55 with CineWide could be assigned the same value as a built-in InFocus IN78? Yes!

Does it Help to Sell a Home Faster?

Dilbeck says often, home theater are helpful to sell home faster, “but honestly it depends on the buyer.”

One buyer may love it, while the next one could care less.

“My partner and I had a listing listed for $2.1 million last year with a full media room below ground level that had a top-of-the-line system. Most potential buyers loved it, but one couple that was very much into wine was going to convert the media room into a wine-tasting room for parties,” he says.

“So it all breaks down to personal preference.”

Are Home Theaters Considered Permanent?

Dilbeck says the definition of “permanent” in California real estate law is the method of attachment.

Those items literally screwed into the wall, like a chandelier, are called real property and items hanging on a nail are considered personal property. So if the speakers are installed/screwed in the wall/ceiling, then per California law they would be real property.

“Anytime there is a question, we highly recommend to our sellers to state what is included and what is not,” he adds.

So what happened with that $2.1 million home? In the end, it didn’t sell.

The homeowner originally priced the home 10 percent above market value because of the media room. He had one interested buyer and used the high-end components as a negotiating tactic, but to no avail.

Dilbeck’s final words to me? “Sorry, it was probably not what you were looking for.”

The entire industry could say that again!

  About the Author

Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at [email protected]

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  Article Topics

Home Theater · News · Home Theater · All Topics
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