As a full-time appraiser, I look at bathrooms practically every day. From older homes with “all original” décor and upgrade features to newer contemporary designed modern homes. The styles contrast considerably and it’s easy to see how society has changed over the years simply based on bathroom designs especially when energy efficiency is considered. My house is of the older variety, relatively speaking as in Las Vegas 1975 is considered “older”, and one of the bathrooms is original to construction. So this week my wife and I decided it was time for some much need renovation. What a welcome relief to view real estate wearing my homeowner hat and not my appraiser hat, or so I thought. We began the process of hiring contractors and getting estimates for the remodel. It was during this process when I became aware that contractors, much like appraisers, share differing opinions on what constitutes an upgrade and how the market reacts to them. The upgrade feature, or what I had previously considered an upgrade, was centered around my old spa tub. I must confess, since we moved into the house 2 years ago, I have only used the spa tub once. As someone who falls on the above average scale for height and weight, it was just too small, as is every bathtub I’ve sat in since I was 12.
The first contractor giving us a bid for the remodel asked if we wanted to replace it with a new one. He said there are deeper ones available that could accommodate my height better. I was intrigued, I asked if he could provide 2 estimates, with and without the spa tub. The second contractor made no mention of the spa tub, said he would remove it and replace the tub with an oversized shower. In his words “spa tubs have become obsolete, the larger shower is more practical, energy efficient, and the return on investment would be well worth it.” For me as a homeowner, the expense is not justified, the difference in adding the cost of the spa vs. oversized shower was $5,000. However, I began to ponder if I would have the same reaction as an appraiser?
Armed with my new perspective as a homeowner in the process of remodeling, I’ve been making it a point to ask homeowners with spa tubs how often they use it during my appraisal inspections. The overwhelming response is not often. In fact, I’ve asked many new home builders in my area if a spa tub is an option buyers can select when purchasing a new home. Many entry level builders do not offer a spa tub as an option, the costs for the necessary electrical wiring alone is cost prohibitive. Some higher-end builders do, but it is an option that is rarely selected, as in these markets most buyers will apply the additional cost toward a new pool with outdoor spa. Therefore, even in a very homogenous new construction market extracting a quantitative spa tub adjustment is not possible. In the resale market, even comparable properties vary significantly in upgrade features. Itemizing each feature and extracting a quantitative adjustment is practically impossible due to limited data sources. Some appraisers, will consider all theupgrade features qualitatively in their final reconciliation. This has always been my approach unless there is quantifiable data available. Armed with my appraiser knowledge of the market and my new “homeowner” perspective I am obligated to determine if a spa tub should even be considered qualitatively in future assignments based on specific markets.
So now that my views have changed slightly regarding contributory value for spa tubs, I began to ponder what other features were considered “upgrades” years ago, but have since become obsolete? Again, every market is different and I’m only sharing my thoughts on my specific market, Las Vegas, Henderson, North Las Vegas, and Boulder City. With temperatures reaching well over a hundred degrees on a daily basis in the summer months and a winter that last all of 2 months and rarely sees temperatures below freezing, I ask the question is a fireplace really an upgrade in this market? For the most part gas fireplaces are installed for aesthetics and not practical use. They are far more efficient was to heat a home. Wood burning fireplaces have been outlawed in Clark County, only homes built prior to 1990 are grandfathered in and show a legally permitted fireplace. Fireplaces are still options offered by many new home builders, but the number of buyers that select a fireplace option is probably only around 10-15%. Now I understand that when dealing with homes at higher altitude in Clark County fireplaces begin to take on more of a practical purpose and, in turn, may offer more contributory value, than at lower altitude. For purposes of this piece, I am not referring to these properties or larger custom & semi-custom built homes were it may be expected to have a fireplace installed based solely on aesthetics. I am referring to the typical home in the valley. Is a gas fireplace, something that buyers must have and therefore, considered even a secondary driver of value?
The reality is there is no way to know for sure; sech market and submarket is different. However, appraisers would be well served to take off their appraiser hat from time to time and become a homeowner or buyer in their markets. A different perspective may lead to an opportunity to, at the very least, consider changing the way they have always done things. Which is healthy to explore from time to time since markets, tastes, decors, and designs are constantly changing.
About the author: Dan Byrne is the senior/managing partner at Las Vegas Appraisal Co., specializing in appraisals for bankruptcy, divorce, estate settlement, and high performance/green homes. Dan has performed informative educational offerings to both appraisers and Realtors. To have Dan come speak at your real estate office on appraisal related topics, email [email protected]