Contributory value of new septic system?

[kellyapp]

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

 

[J Grant]

There are no past sales of homes with new vs old septic tanks? Hard to believe....the sales may not be of comps for your subject, but they can be comps for each other and then extract a % difference. Call and ask RE agents as well if they see buyers paying more, and how much more...full cost, aprox 1/2 cost, etc. Or does it simply make a house faster to sell but not much of a $ difference (market exposure) It would seem an adjustment is indicated but you need some support for it.

 

[Terrel L. Shields]

That falls under the "it's necessary" and any buyer expects a functioning septic system or mode to get rid of waste. Same with a roof, air conditioner, etc. A buyer expects these to function and I doubt they will pay much premium for same, rather, if it was not done, they would discount these items not up to snuff as of the time they make an offer.

 

[Mark K]

Use paired sales of homes that have new roofs or new HVAC, new kitchens; see if there is a market premium for those items and use the same % amount for the septic. Buyers expect functioning HVAC, septics, roofs but they don't expect new ones. OTOH, most buyers would prefer a new septic, etc. and would likely pay more.

Also, I'd suggest that its a % of the home value and not necessarily a fixed amount. A new septic (or other long lived item) in a $40K home is not worth the same amount as that for a $400K home.

In the past, I've made adjustments in the 3-5% range for these items, reflected in the condition section of the grid.

 

[Lycabull]

Kelly, welcome to the forum. One thing you will never find here is a shortage of opinions.

You're the appraiser, figure it out. I kid

I can not comment about your market, but can tell you about my thoughts on mine.

Yes, I think it has a contributory value. New things often do. I doubt I'd make a line item adjustment for it, but I'd sure consider it when making my condition rating. Just like I would if they had just replaced the roof.

As has already been mentioned and will probably be mentioned again; if there are no comps in the neighborhood, you can always abstract an adjustment from comps in a different but similar area if that is the route you want to go.

As usual, I agree the Terrel. Darn it Terrel, can you quit being so darn agreeable all the time? I came here looking for a good argument.

I just met my new neighbor up on the corner yesterday who is building a house. I was curious what she paid for the site and was to lazy to go look it up (about an acre with a 2 section MF house that was removed). When she told me, I was surprised because it was about $10K under market. She told me she got the place so cheap because the septic was bad and would require replacement. I paid about $5K for my own system about ten years ago. I estimate the balance of her discounted purchase price was due to the fact the 2 section MF house required demolition and removal.

 

[kellyapp]

Thanks for all your answers. Lycabull, i appreciate your Monty Python reference (argument clinic sketch). Looks like a mixed bag of answers, but I seem to be hearing, some contributory value but not much. That was my initial thought also, but just wasnt sure. Very rural area, so difficult to find comps at all, let alone paired sales, but using some from different area is a thought too. Its just a very difficult thing to extract, given that homes in this market are usually very dissimilar, thus very difficult to isolate a value for one particular item.

 

[Noreen]

That falls under the "it's necessary" and any buyer expects a functioning septic system or mode to get rid of waste. Same with a roof, air conditioner, etc. A buyer expects these to function and I doubt they will pay much premium for same, rather, if it was not done, they would discount these items not up to snuff as of the time they make an offer.

I vote with Terrel, without a functioning septic system, it would render this structure uninhabitable.

 

[CANative]

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.

 

[Meandering]

•Septic Tank Materials: a steel septic tank rusts away, first losing its baffles (which lead to drain field clogging) and eventually rusting at its bottom or sides. The rate of rust depends on the soil conditions and soil acidity and other factors. A concrete septic tank can have a very long life, in excess of 40 years, except for cases of poorly-mixed concrete or possibly acidic soils which may reduce that span. Plastic or fiberglass septic tanks can expect to have a similar life unless they are mechanically damaged.

http://inspectapedia.com/septic/Septic_System_Life.htm



For a 60 year old dwelling this is normal maintenance for the C5 or higher condition rating.


.

 

[Elliott]

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.