DOES TECHNOLOGY AID A DEPRESSED REAL ESTATE MARKET?

Do Home Theaters Actually Help Sell Homes In Today's Real Estate Market?

By: Jerry Del Colliano, August 6, 2012

"Believe it or not, I think the real estate depression that has thrown the entire U.S. economy into a tailspin is close to having hit bottom. Inventories have in Southern California dipped to five-month levels. Hedge funds are buying up distressed properties in hopes of making a quick buck in a Wall Street-inspired version of the mid-2000s "flip." Mortgage interest rates are at all-time lows (assuming you can qualify for a loan, which isn't easy, even for a millionaire or many multi-millionaires). Beyond low rates and less inventory, a Generation X baby boom is on (something that my wife and I have taken part in, as well as nearly all of our couple friends, who are having babies) in many major cities around the country. Today, more so than in years past, there are many good reasons to buy a home.


With my house potentially going on the market soon to help pave the way for a family-inspired domicile upgrade, the topic of whether or not a home theater or home automation system add meaningful value to the sale of the property has been a hot-button discussion. In my house, I have a CEDIA-tastic 2007 stadium-seat, Middle Atlantic rack-mounted, audiophile-grade theater with every goodie I could pack into the room. These include but aren't limited to professional room tuning by Bob Hodas, video calibration by Kevin Miller, Creston control of the gear, fabric walls, tens of thousands of dollars in room acoustics, high-end cables, forced air cooling, Lutron lighting control and much more. It's pretty fancy and a great media room located in the one city in the country where having a light-controlled media room might just sell. But selling isn't my concern - it's the value that you get. Will people pay extra for a home theater, media room and/or home automation? 

Jade Mills, the top-grossing real estate agent in tony Beverly Hills who ranked Number Ten in national residential real estate sales in 2011 by RealTrends.com/WSJ reporting, says "Home theaters are essential in the larger homes in the Los Angeles area today. I find more and more of my clients wanting fully automated homes. They love the convenience of having the entire house electrify from a touch of their iPhone from the car when approaching the garage. What better way to sell a house than to walk into a home with music playing, fire pits burning, and electric shades ascending with a push of a button. It seems to be the new way of life."

Chris Cortazzo, far and away the top-grossing real estate agent in Malibu, California, adds, "With the luxury buyers becoming increasingly tech-savvy, the demand for networked or 'smart' homes continues to grow. Media rooms with fantastic home theaters are also becoming more and more common and more sought after. The combination of these elements can provide increased value to buyers, giving sellers an edge against their competition in the marketplace."

In high-end homes, expectations of media rooms, highly programmed home automation and AV trickery are expected, but what about in a more modest house? Laura Gallagher is a Remax real estate agent in Collegeville, Pennsylvania (a suburb of Philadelphia), who says, "Often, we see media rooms as part of finished basements in the homes in our market which average about $375,000 a property. While I don't think an appraiser would put a specific premium on the value of a home because of a distributed audio system or media room, it sure does help differentiate a home from the competition. In developments where one house is very similar to the next and there are many houses for sale at any given time, the one with the flat-screen TVs, media room or even the sub-zero fridge will sell first." 

The way homes are appraised today has changed drastically since the go-go real estate markets of the mid-2000s, mainly to appease banks that will no longer take many risks when lending. Today's younger buyers do like their IT and AV technologies. They want a wired home if possible and can be influenced to buy one home over another because of how "wired" a home might be. It's hard to determine exactly what premium comes from throwing in your AV gear with the land and the building. One real estate agent suggested that you pack away your top audiophile gear and replace your best gear with more entry-level components in a listing over $1,000,000, as the AV enthusiast gets to retain his investment in his high-end gear while still getting the benefit of showing all of the AV goodies in a home. Another pundit suggested that some mid- to higher-level sellers can add some technological sizzle to a home listing by using affordable lighting equipment with new products like Insteon, which allows iPad or Android control of lighting, shades and other automation goodies for hundreds of dollars - not the tens of thousands of dollars that AMX, Crestron and other home automation companies charge for full-bore systems. "