Contributory value of new septic system?

[Renee Healion]

statewide MLS, wild cards searches

A tip--Search estate sales, wide and back a bit. This issue comes up when an elderly person has used a septic alone for some years without a problem but it turns out the system is inadequate under normal usage (based on # of BR). That is when the buyers and sellers hammer out these deals, in my experience. The sellers need to settle the estate; entry-level buyers have limited resources. In that case the SP may even go up somewhat but not by the cost of the work. That sounds like a good basis for developing an opinion of contributory value of the new over the adequate.

This state has mostly septics (based on area). When a system fails, new rules apply. Once discovered, it has to be disclosed. It is site specific and can cost $5,000 or it can cost 5 times that. So it is a big deal.

Search wild card terms in MLS in case an agent entered pertinent remarks. Ask the agents in the deal before you if agents they know have seen similar cases. They want to close the deal so they may do some of the preliminary canvassing of their colleagues for you.

Extract a % not a $ especially when comparing over time.

 

[Terrel L. Shields]

Darn it Terrel, can you quit being so darn agreeable all the time?

It's your name....Like a Bull

 

[kellyapp]

Thanks to everyone for your responses. I really appreciate it.

 

[Lee Lansford]

My question relates to a new $15,000 septic system being installed in a 60 year old home prior to closing by the seller. Is there contributory value? If so, what would be estimates on how much? I feel that must be something as I would choose a house with a new septic vs one with an old one if they were similar enough. But how do I figure out how much it increases overall value if paired sales are not available. Thanks

I doubt that high on the list of wants among typical buyers of what they expect in their new home is a new septic system.

Folks sort of expect that they should be able to flush their toilet without fear.

If you want to go a bit higher within the range of adjusted sold prices as to where to hang your hat for your opinion of market value, go for it.

 

[Michigan CG]

I doubt that high on the list of wants among typical buyers of what they expect in their new home is a new septic system.

Folks sort of expect that they should be able to flush their toilet without fear.

If you want to go a bit higher within the range of adjusted sold prices as to where to hang your hat for your opinion of market value, go for it.

I agree with this guy. It is called a reconciliation of value for a reason.

 

[William Rightsell]

My question relates to a new $15,000 septic system being installed in a 60 year old home prior to closing by the seller. Is there contributory value? If so, what would be estimates on how much? I feel that must be something as I would choose a house with a new septic vs one with an old one if they were similar enough. But how do I figure out how much it increases overall value if paired sales are not available. Thanks

I think your answer is right here. Firstly, the buyers REQUIRED it be replaced. Like others said....they expect it to work. No septic = no offer more than likely. Secondly, did the buyers pay MORE than list price due to their own requirement that the septic be replaced? If not, then that tells you they don't place a premium on the new system. They just want a working one. And like anybody else, if they have to fix/replace it, they will discount any offer by likely more than the actual cost to repair/replace.

 

[Non Sequitur]

Buyers search far and wide for views, location, curb appeal, etc. New septic systems, not so much. Address it in the reconciliation if you feel strongly about it.

 

[Peter LeQuire]

All long lived items in a house are expected to be functional by the market.
If a comparable has a functional septic system and your subject has a brand new system, there isn't a lot of difference. Their marginal contribution are similar. They both treat poop.

That's where the truth is. There may be a marginal difference, but not much. Determining that difference is problematic. It's not the sort of amenity you invite friends over to admire after you close and move in.

 

[Renee Healion]

Being local to you, I understand why the question occurred. I agree with your implicit concern that here it is not like swapping out one known component for a new one; compliance involves risk of expense shock and even questions of feasibility. Informed buyers like knowing compliance is resolved for the long-term.

If you want to sound out opinions from widely varying markets, this is the place. If you want to see whether there is support for an adjustment in our market, you need to look at our market's data. I understood your question to be how to research your question.

If it can wait til Wed. when I am not heavily committed, PM with your number and we can talk about how to search for that. If you cannot wait and still want to look, locate listings of older properties where a deal has fallen out and where the property is then relisted but with the new septic by seller. What probably happened is that the departed buyer exercised the septic contingency invoked in most contracts (non-REO). Once discovered, the seller has to disclose. If disclosed, the prospects of a sale as-is are nil, so the seller takes it on and may adjust the LP. In those relistings, it is reasonable to assume the only material change is the septic. Look at LPs and SP and follow up to determine to your satisfaction whether a premium was paid.

It is commendable that you are attuned to your market enough to ask the question. It may be a business decision as to how much time you want to invest in pursuit of an answer, in which case, making a judgment call as suggested by others could apply. It is nice to be able to say you researched the matter.

 

[ctapraser]

You're not going to be able to develop a measurable market reaction through the three approaches. It's one of those things which, like you noted, is probably favorable for the obvious reason that it's better to have something new than old.

I might just consider this while reconciling the market value indications.

, agreed