What to Watch for When Appraising a Smart Home
November 1, 2018 |
As an appraiser, your job includes many aspects. But what happens when you’re appraising a smart home? How valuable are smart homes when it comes to appraising? Is smart technology something you can make an adjustment for? Discover the process for appraising a smart home and what to watch for.
What Constitutes a Smart Home?
A smart home is more than just an app that connects to your television or turns your thermostat down. Here are all the aspects to consider when determining if a home is really smart.
Technology Built into the Home
Smart technology takes on two different faces when it comes to appraising a home. The first involves technology that is permanent to the home, or at least would take a significant effort to remove. Features like:
- Advanced security systems with surveillance cameras
- Smart HVAC systems with digital thermostats
- Electric charging stations for vehicles
- Smart swimming pools
Other Smart Technology
The second includes smart items that might be included in the sale but aren’t necessarily permanent. These might include:
- Smart appliances like refrigerators, ovens, and dishwashers
- A smart hub connecting all the devices, such as Amazon Alexa or Google Assistant
Even if the home doesn’t have any of these features, you may want to consider the home’s ability to support smart devices or systems. Look for:
- Additional electric outlets, especially in places where televisions, computers, and digital devices might be or where they might be charged
- Electric outlets with built-in USB ports
- Extra cable outlets
- LED lighting fixtures or systems
- Built-in charging stations
Other Types of Smart Homes
You’ll also want to consider if the home is intended to be a rental property or income-producing rather than a primary residence for the buyer. For apartments, condos, and assisted living properties for the elderly or disabled, smart features might also include:
- Remote technology for common areas, such as parking lots, pools, media rooms, and fire pits
- Concierge service technology
- Emergency services technology, such as nursing or automated fire calls for smoke detection
- Retrofits for people in wheelchairs, on scooters, or with other mobility or sensory issues
In any case, take careful note of any smart technology the home offers.
What Adjustments Can Be Made for Smart Features?
Homes that are tech-ready likely don’t need any adjustments, especially as more people come to expect tech readiness as a standard. But for homes that already employ smart devices and systems, how do you determine what adjustments can or should be made?
Do your research to decide if an adjustment should be applied. The main problem with any technology is obsolescence. Just like a three-year-old laptop or cell phone is outdated, today’s smart technology may be obsolete three to five years down the road. Consider both the residual value of the smart items and also the market comparability of the neighboring homes.
- Energy-saving items and systems are the top choice for residual value and may constitute an adjustment.
- Check listings of comparable homes in the area for smart features.
- Take notes using JotNot or other apps for appraisers to keep things organized.
Regardless of whether you decide on an adjustment, you need to be clear on whether the smart items are included in the purchase price. This may not be an issue for new homes, but it certainly is for refinancing and homes previously lived in.