What I Was Told By Three Different Appraisers
When I first entered the residential real estate world, my first challenge was learning how to price homes. One of the things I absolutely had to understand is how much value a pool adds to a home. So I decided to ask appraisers how they did it. Here's what the first three appraisers I ever met told me ...
APPRAISER NUMBER ONE told me he would give 50% of the value of a new pool of similar quality if it is in good shape. Even as a neophyte, I'd heard that quite a bit so I just assumed it was the norm for all appraisers.
APPRAISER NUMBER TWO told me he normally takes the value of the home on its own (without the pool or land) and 10% of that value in for the pool. For example, if the structure of the home alone was valued at $600K, he'd give $60K credit to the pool. That made sense too.
APPRAISER NUMBER THREE said he doesn't assign much value to pools at all. They just make it easier to sell. I didn't buy that then nor do I buy it now.
That was my very first lesson in understanding appraisers all march to their own tune. There really is no cut and dried answer of how much value a pool adds to a home. I've always said accurate pricing is more an art than a science.
How Do I Assign Value to a Pool?
That depends on the price of the home and condition and age of pool. In this area, if the home is priced at over $1 million, it's almost expected to have a pool. Therefore, if I'm selling a million dollar home without a pool, I know I'll be competing against homes that probably already have pools. I have to price my listing attractively enough so a buyer can add a nice pool without being upside down as soon as the pool is in.
However, if I'm pricing my listing with a pool against other homes with pools, it's much easier. If all the homes are of the same general age, the pools probably are too. I just want to keep my listing in the same general price on a psf basis. Of course, there are a myriad of other things that come into play on pricing. I'm just talking about the pool now.
The tricky part comes when a seller has added a really knocked out pool with all the bells and whistles and now want full credit when they sell it. That blows the price of the home out of the water. Even if they find a buyer who will pay an above market price for their home, it might not appraise. If they make up the differential with cash, they'll run into the same situation when they decide to sell their home unless they're in it for quite some time.
What's a Pool Cost Today?
Today's nice but no frills, one water feature, in-ground, gunite pool without a spa starts at around $60K. Where that might be a good fit for a more reasonably priced home on a typical city lot, when you get into very expensive, true custom homes, those pools would look completely out of place. Now you're getting into the $100K price range and we've sold homes with $200K pools.
Should I Put a Pool In?
Pools are a lifestyle choice, not an investment strategy. You probably won't get out of your pool what you put into it, but when you decide to sell your home, it certainly won't hurt you. Your pool could very well be the thing that entices a buyer to select your home over a similar home without a pool. Especially here in Texas with our hot summers.
I've listed homes without pools and was told by the buyer agents "if it had a pool, my client would have bought it". But I can't recall ever hearing a buyer agent tell me "If the home didn't have a pool, my client would have bought it".
If I knew I was selling my home within a couple of years, I probably wouldn't add a pool. But if I felt sure I was going to get at least three to five years of enjoyment out of a pool before I sold my home, I wouldn't think twice about adding one.
Here are a couple of my favorite pools, both in Lucas.