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finished basement with home theater

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ross

Thread Starter
Freshman Member
Joined
Jan 18, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Folks,
Need your opinion. I am doing an appraisal on a high end two story home with finished basement. The basement has been finished in a 1950's diner motif with a home theater. A cost of about $120,00 went into this.
This basement was featured on a website. www.audiovideointeriors.com
It is in the archives section under May 2001 Theme park.
I am really curious about your opinion into how to write this up.Thanks!!!
Dan
Indian Trail NC
 

ross

Thread Starter
Freshman Member
Joined
Jan 18, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
The article is under archives under AV interiors under MAy 2001 Theme Park. just thought I would clarify that.
Thanks!!
Dan
Indian Trail NC
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
If you have a theater, you have not only the room but all the bells and whistles that go with it, including the projection TV, surround sound, and equipment as this normally transfers with such homes. Conversely, such equipment has a very short economic life, say 5 years, due to changes in technology. In Texas, we have these on 2nd floors, so I can't answer whether you have a functional obsolescence with basements - your call. What I would do would be to search your sales records to see if home theaters are not unusual in your market. If you find others, check and see if you can find a premium over and above the square footage adjustment. This would be your contributory value of the room as a theater. As to the decor, such uniqueness is common and typical in such theaters. I've seen them with custom carpet duplicating 30's-50's era theater carpet, popcorn machines, etc. Finally - comment FULLY. Describe everything fully so you can support your adjustment. Good luck.
 
A

Anonymous

Guest
120k for a finished basement?? talk about over improvement
 

Larry Lyke

Senior Member
Joined
Feb 2, 2002
Ross --

It's a little hard to give you much help because you didn't really tell us a lot about what you're doing. Is it a sale or a refi.

Although it sounds like a super adequacy, is it in a sufficiently upscale price range where really expensive nonsensical amenities are common and thus expected.

If this amenity had anyting to do with the Owner's occupation and has been depreciated by virtue of the Web site use therewith, you might handle it another way.

And, there might be minimal contributory value -- just another finished Basement, which is just another finished level of the house.
 
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Anonymous

Guest
Sounds like an over-improvement. But I bet I know that the owner is a producer for a syndicated radio show. They talk about his basement all the time.
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
The quote of $120,000 is certainly hefty, and perhaps he did spend so much to do it up just that way----the way he wanted it. I see quite often the examples of folks being creative at their homes, and doing certain things and investing their money in a way which satisfies them, then, and while they live there. I guess folks call that value-in-use. Does the quote of $120K mean that one should assign $120K of market value to the basement ? While I rarely ask for someone to show me records of invoices paid for special contractors, or materials purchased (for the do-it-your-selfer guy) I must wonder about these bold and fast quotes of what someone "spent" to do something. This past summer I had one order where I was greeted at the front door by a guy who IMMEDIATELY said, "You the appraiser ? You know, I spent $50K on landscaping this place." .....and proceeded to point his finger out and sweep his arm through the air from left to right. I simply said , "it does look nice, I am sure you have those receipts from that work to show me". This was a place looking to re-fi and the aggressive "estimate" on the order was a focus toward what would be 58% value increase over what he paid 18 months earlier. Yes, it was c.o.d., and his wife gave me the check before I left. By time I was back at office there was call to me from his fast-Eddie loan broker in CA saying that the "h/o was complaining that I was being pushy about asking him questions about his house". ......and boy, are they in a rush, so, when will the report be written up?.....to which I said, what report ?, if your client is going to gripe about someone asking for information about his property, then I guess someone else is going to be doing this report, not me. Uh...Uh....Uh.....Uh, (click), ...and the check was promptly mailed back. Sorry, to inject my story there, but sometimes.... Your task may require some extra time and fee, and finding comp sales with unique basement details , that have SOLD, will be important. Take lots of interior photos. If this place has never been listed, never had a legitimate offer to purchase placed on it, then it certainly is a challenging assignment.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Nice basement :!: But if I had more dollars than cents, I still don't think that I would get to use it often.

Maybe you could apply the income approach, and do a quick spread sheet on a private movie club? Just kiddin. Boy, you got a tough one there.
 

ross

Thread Starter
Freshman Member
Joined
Jan 18, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Thanks to all who posted here. And FYI it was for a refii and no I did not assign a value of $120,00 to the basement because I learned a long time ago cost does not equal value.
It is definitely an example of value in use and I think it will take some time to get the investment back from the basement improvements.
Dan Ross
Indian Trail NC
 
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