Monthly Archives: December 2013

Does a Swimming Pool ADD Value to a Home?

Does a Swimming Pool ADD Value to a Home?

I’ve been asked “how much value does a swimming pool really add to your home?” many, many times, and my answer always is … it depends.

If you’re thinking of adding an in-ground pool or buying a home with an in-ground pool you’ve probably heard that tired old saw that a pool adds $10-15k value to a home and limits the buyer pool for your home when you go to sell it. While true as a sweeping generality, there’s more to this topic than meets the eye.

 

high-end-poolNobody will argue that the swimming pool in the photo shown to the left will add considerable value to the home it accompanies. The reason is that it speaks to art and craftsmanship and quality … three important considerations for a pool or for that matter any addition or expensive home improvement. The design marries absolute unity with absolute variety and will be almost universally considered beautiful by most who encounter it. The scale also suggests that it is attached to a larger home on a larger piece of land … the other two key considerations when discussing similar improvements and their value.

Now most pools look like the one showninexpensive pool to the right. They are pretty ordinary, well-done, and cost somewhere in the under $50k range depending on it’s liner (plaster or vinyl). Included is a small hardscape area, cast concrete, pavers or exposed-aggregate concrete, and fenced enclosure around the pool area or the yard, depending on the local building codes. This is your classic in-ground pool and this one does add the $10-15k that any realtor will tell you. If you look at this picture you will see it is located in a fairly good sized yard, so it’s value would be in the upper end of the range. If it were on a small lot and took up most of the back yard it’s value would be in the lower end of the range.

mid-range-poolThe pool shown to the right is one that while costing in the $50-150k range will not add it’s full cost to the value of the home will add significantly more than the $10-15k typically bandied about. The natural stone hard-scape and the addition of an integrated hot-tub and gas-fired outdoor fireplace are desirable features that add value individually and add more combined value when integrated into a unified design. Again, as you can see, the pool is a small part of a larger yard and suggests it’s attached to a larger home with superior fit and finish.

Okay, so how can one determine what a pool adds in value.

For this exercise I took the price per square foot for homes sold in the last six months for million dollar properties in the inner suburbs of metrowest Boston.  If you compare the price per square foot across the six selected towns you will see that there is a significant increase in the price per square foot in the selling price of homes sold with pools. You will also see that the overall increase for all the towns is pretty constant. So, as you can probably imagine, for these towns, pools that have a high degree of fit and finish and are in not outsized in proportion to their lot size add about 11% to the value.Pool-Charts-PSF

Then if we take the number of homes sold with pools and compare them to the total market for their towns, we see a strong desire for them in some towns, in other towns not so much. For example, in Lincoln homes with pools represented almost half of the market, Weston homes with pools represented about a quarter of the market,  while in Lexington they represented only about 10% of their market. So it could be figured that putting a pool in Lincoln or Weston is a much better investment than putting one in Lexington.Market-Share-pools

So as you can see, the real answer to the question is determined by two things: 1. how nice the pool is and 2. is it considered a valuable feature in the town where it is located.

Should you have questions about a specific application and location feel free to give me a call, I will be glad to help you out. Call or text 978-580-1069.

Can you buy/sell a house with a failed septic system?

Can you buy/sell a house with a failed septic system?

Although they are very common in Metrowest, not all homes have septic systems. A system that no longer functions as designed is considered “failed” and while they are always problematic,  they can be incorporated into a real estate sale and get you to the closing table in one of three ways.

First, you can undertake the work and complete it prior to closing, with a full sign-off from the Board of Health in the form of a Title 5 Certificate of Compliance. This is often the preferable course for all parties and a lender, if any, and this option will get you the highest selling price for your home. You will need a design and this takes time for testing holes and design approvals so plan accordingly. If you’re short of funds, some septic installers will begin and complete the work slightly before the closing date and get paid out of the seller funds at the closing. This would require you to agree to release the funds directly to the installer at the closing.

Alternately, Title 5 does not require that a system be in passing condition prior to the sale, but most lenders will not issue a mortgage until the failing system is upgraded or funds to perform the upgrade are escrowed.

So you and the Buyers can agree to put an appropriate amount of money in escrow guaranteeing that the system will be installed after the closing. The usual formula for calculating this amount is taking the median of three bids plus a 50% contingency reserve. Most installers are able to give solid estimates based on a design, but they will charge more it they hit ledge, or other unforeseen conditions, so the contingency is there just in case. Again, this would require you to agree to release the funds from the closing to the escrow account. The escrow funds are usually held by the bank’s conveying attorney who will pay the bill for the septic when it’s completed, and then return any extra money to you. Many lenders don’t allow septic hold-backs at all, so this option, while an excellent solution if you’re tight for funds, might limit your pool of buyers and thus extend your time on market, but it won’t affect the price you’ll get for the home. Here’s an example of how this might work: A home is on the market for $300K with a failed Title 5. A buyer agrees to purchase the property, and they both agree to put the septic repair money in escrow. The median estimate is $30,000 for the system. The buyer, at the closing, pays the seller 300K, and the seller then pays of his mortgage (100K, for example) and then takes 150% of the 30K ($45,000) and puts that in escrow with the closing attorney. The seller leaves the closing table with $155,000. The buyer then has the new system put in place, and it only costs $30,000. The buyer sends the bill to the closing attorney, who pays the installer, and refunds the difference ($15,000) to the seller. There are variations on how this unfolds, but this would be a typical scenario.

A third option would be to get the buyer to pay for the septic system, although this is less likely to occur. A buyer who agrees to assume the cost of replacing the septic system will factor the cost of replacement plus a contingency factor into his bid price for the property. If it costs less than he planned, he pockets the difference. This would most likely have to be a buyer who can pay cash for your home. Most municipalities will allow him up to a year to fix the septic system and update the Title 5. But if the septic system isn’t working, the Board of Health can require that nobody will be living there. Not many people can buy properties with cash, so counting on this option will severely restrict your buyer pool, exponentially lengthen your market time, and ultimately get you less money for your home. So, in summary, bottom line … marketing your home with a failed septic system will affect the property’s value and restrict the pool of buyers, but it has been done many times successfully and with the right agent (shameless plug for “me”) you can do it too.

What is a Contemporary House Style?

What is a Contemporary House Style?

Even though they are not “contemporary” to anyone who is living in the 21st century, the name contemporary most often represents the mid-century modern house style that can be found in small pockets throughout Metrowest. In my opinion, they look best when they come with commanding views such as when sited on hilltops or near the water.

Perhaps the most famous of all contemporary homes is the work of Frank Lloyd Wright and his famous “Falling Waters” house in western Pennsylvania.  There are no homes designed by him in Metrowest, but there are quite a few that show inspiration from his use of native materials, combining inside and outside spaces into one and design simplicity.

Builders and buyers liked the clean lines and contemporary styling and the great use of space associated with these multi-level homes, and built them here primarily in the 1960’s and 1970’s although they are still built today. There is no exact defining set of elements, almost all of these homes are architect-designed and can range from minimalist to deconstructionist to Bauhaus to A-Frame styles

Some of the common characteristics are: garage placement on the front of the home to cut building costs: shallow, pitched roofs that often extend from a higher level down over the lower level: simple, linear rooms that are cost effective to build and often attempt to “bring nature inside”; windows that are very large and sometimes trapezoidal following the roof pitch in gables; and exterior finishes that are a mix of natural materials like wood, brick, or rock combined with Texture-111 and cedar board-and-batten vertical siding.

Because split-levels, raised ranches and multi-levels are sometimes considered less desirable than many other house styles, realtors often label those three styles as a “contemporary”. So a word to the wise, if you find a contemporary on the listing services or one of the real estate portals and it’s living area is less than 2000 square feet, it probably has some kind of feature that with a little hyperbole could be considered to make it a contemporary, but it’s usually a split.

Contemporary homes appeal to a limited buyer pool in Metrowest (unlike colonials) so because of this their market value is usually lower than similarly sized more traditional house styles. Also because the pool of buyers is smaller their time on market is usually longer. However, if you like them (and I do), there is a diverse assortment of terrific contemporaries available in the Metrowest market.

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For some great examples of Contemporary Style Homes click on the above Pinterest link

 

 

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