The Dreaded Indoor Pool Question

[tso2214]

I have read many other questions and comments posted about indoor pools. We live in Northeast Florida. The pool room was built by the former owner who was an engineer. Room is 32 x 60 and the pool is 15 x 30. Over the pool is a 15 x 30 retractable glass roof. Also in the room is a 12 ft wide solid brick fireplace, full bathroom and a walk in redwood sauna. A few years ago, we installed a 10 ton Trane heating and air system ducted through the ceiling.

Everything was professionally done and permitted. The city reflects this room as heated space.

This room is attached to the house but is separated by two doors. Certainly a safety issue with children to ensure you can lock access when necessary. We use this room just as often as the rest of the house...maybe more. Very comfortable.

Being a reasonable person, in my neighborhood, I would not expect to sell this house pricing this room at the same square footage as the main part of the house. It would price too high for the area.

Have already paid one appraiser to value the house. He simply compared it to other homes with outdoor pools and noted that it would cost $150k to build this space in the current market.

My realtor reviewed this appraisal and felt it was too low. She had her appraiser friend stop by for an opinion on the room. His advice was that the room could not be considered square footage because the roof retracts (not sealed). However, the sauna and bathroom can be counted. He believes the room adds $10-$20k in value. (Just the AC unit cost $10k to install.)

My question: Is there a right/wrong way for appraisers to value this space?

 

[Michigan CG]

There are few appraisers who have actually appraised a home like yours or know how to do so without comparable properties that have sold. Why are you having it appraised? Did the appraiser who appraised your home have comparables with indoor pools?

 

[Ken B]

You state the property has transferred since construction of the pool space. Assuming the sale was representative of a market transaction, how did it compare to other sales at that time? With thin market evidence upon which to base an adjustment, that transfer may be the best upon which to build a supportable adjustment.

 

[ctapraser]

I have read many other questions and comments posted about indoor pools. We live in Northeast Florida. The pool room was built by the former owner who was an engineer. Room is 32 x 60 and the pool is 15 x 30. Over the pool is a 15 x 30 retractable glass roof. Also in the room is a 12 ft wide solid brick fireplace, full bathroom and a walk in redwood sauna. A few years ago, we installed a 10 ton Trane heating and air system ducted through the ceiling.

Everything was professionally done and permitted. The city reflects this room as heated space.

This room is attached to the house but is separated by two doors. Certainly a safety issue with children to ensure you can lock access when necessary. We use this room just as often as the rest of the house...maybe more. Very comfortable.

Being a reasonable person, in my neighborhood, I would not expect to sell this house pricing this room at the same square footage as the main part of the house. It would price too high for the area.

Have already paid one appraiser to value the house. He simply compared it to other homes with outdoor pools and noted that it would cost $150k to build this space in the current market.

My realtor reviewed this appraisal and felt it was too low. She had her appraiser friend stop by for an opinion on the room. His advice was that the room could not be considered square footage because the roof retracts (not sealed). However, the sauna and bathroom can be counted. He believes the room adds $10-$20k in value. (Just the AC unit cost $10k to install.)

My question: Is there a right/wrong way for appraisers to value this space?

Yes there is a right and a wrong way to appraise your house. The bold above is the wrong way.

An appraiser does not look at a property and say, "uh this room and sauna add 10-20K".

An appraiser gathers/translates comparable market data to support an opinion of market value/produce appraisal report.

 

[Tom Woolford]

Sounds like an interesting space, but none of it would be considered living space. One of the best judges of potential value is how popular a feature is. In 28 years of appraising in Florida, I have seen exactly three indoor pools in over 12,000 assignments. That leads me to believe that they are not popular, and would have minimal contributory value to the home. Certainly much, much less than it cost to build. I don't envy your appraiser the assignment, and the second guy was probably on the mark except for treating the sauna and bath as living space. They have value, certainly, but not counted as living space.

 

[ramrcdk]

Hello, you have described the area very well. You have also described the obvious issues of overimprovment due to the UNIQUE design/cost/market return. Does any Agent know of a property with similar improvements? Even IF same sold years ago? As the previous post indicates why do you care? Are you selling? You could have a cost analysis completed for "cost", then you could apply a depreciation percentage for effective age/life. If the applicable number was somewhat accurate, it may indicate the highest "cost number" for (some type of) use. IF in your market this improvement would be considered "very appealing" and IF (comp) sales are not "available", this may help you obtain an added value to the list price of a "typical and/or otherwise comparable property". Be very aware to keep in mind... cost is not market and this number would likely indeed be NOT market re-coup-able. You could use it as an @$ amount in marketing. I do agree an outdoor pool-entertainment area is not directly comparable to what you describe. Please keep in mind that use of same may have been THE only next-most-comparable sale(s) the appraiser had to use. If the Appraiser did an open- search of pool amenity properties...even outside boundary area or time lines, then there were no other choices. In saying, perhaps those comps although outside had offsetting high-end features. I am not in an area where pools are typical and same in recent past months will remain on the market longer than similar properties without pools...saying because my input may be limited in direct use to your issue. Hope this sorta...helps.

 

[tso2214]

It was recommended to us that we pay for an appraisal before putting the house on the market. The comps used by the appraiser did not include any homes with indoor pools. One did not have a pool at all but a recreation room.

My husband and I are downsizing our way to retirement and have already moved to Tennessee. This is too much house for us at this point and do not want to rent it. So, on the market it goes.

So is an appraisal that is based on houses sold in the area without the indoor pool reliable? Certainly tough to find comparables for such a unique feature.

 

[Marty Boone]

Maybe the opinion of value provided by the Appraiser is not Low.
Maybe the opinion of value provided by the Realtor is too High.
There is a lot more to value than plugging in a dollar per square foot formula, or as I like to refer to "The Realtor Method"

 

[Deleted member 128537]

Sounds like an interesting space, but none of it would be considered living space. One of the best judges of potential value is how popular a feature is. In 28 years of appraising in Florida, I have seen exactly three indoor pools in over 12,000 assignments. That leads me to believe that they are not popular, and would have minimal contributory value to the home. Certainly much, much less than it cost to build. I don't envy your appraiser the assignment, and the second guy was probably on the mark except for treating the sauna and bath as living space. They have value, certainly, but not counted as living space.

This comment is right on the mark. If an amenity is highly desirable there will be more around. Otherwise determining value is going to be very difficult. An appraiser may have to look State wide for something like this to see what affect the improvement might have on a market, and then compare those markets to your market (if that is possible).

At any rate whoever buys your house will have trouble with financing if they pay a premium for the pool since there might be no data supporting it. So if someone buys your property they better not use an appraisal contingency or you could be in trouble of the purchase going bad.

Sometimes you have to understand that something may be so over improved it can actually be a negative. In my area there is a 30,000sf house for sale. Just the taxes alone are over 100,000 a year. Can't even imagine how much it costs for maintenance and heating. The estate has tried to give it away, but can't do it. They have had it for sale for years.

Now I'm not saying your pool is that way, but this just shows you that cost can have little to do with market reaction.

 

[Noreen]

Sounds like an interesting space, but none of it would be considered living space. One of the best judges of potential value is how popular a feature is. In 28 years of appraising in Florida, I have seen exactly three indoor pools in over 12,000 assignments. That leads me to believe that they are not popular, and would have minimal contributory value to the home. Certainly much, much less than it cost to build. I don't envy your appraiser the assignment, and the second guy was probably on the mark except for treating the sauna and bath as living space. They have value, certainly, but not counted as living space.

I totally agree with this statement. All real estate is local, so obviously I cannot speak to or have any knowledge of the market in FL, however I have appraised four homes with indoor pools in my area (Pelham, NH / Manchester, NH, Tyngsborough, MA & Dracut, MA). I personally approached my assignments from the standpoint that this area is considered a separate area, more like a four season oversized porch with the additional feature of the indoor pool ( My thinking was it would create a misleading report to reflect this as "living area", you could not leave this open to the primary living area with pets or young children). I gathered as much current data as I could and then went back in time for the "indoor" of it all. We are obligated under our appraisal licenses to quantify "what we think" so Tom is spot on, we cannot spout our opinion and have it be so. I approached each being a "super adequacy (over improvement), I had at least five to six sales of similar structures, then larger enclosed porches and if I could not find "indoor" pools ( I searched the counties to ensure I did not miss a recent sale when I got down to the "indoor pool" layer of sales), I found "inground pools" and had to approach this method to extrapolate market response. Of these four assignments three were for refinance and one was for a sale. I would be cautious and have an unbiased independent appraiser not connected to the broker but certainly knowledgeable in your area with at least 10 years experience to engage in this assignment. You want the most thorough work product possible ( this is a large asset you are looking to market). Best of luck on your "downsizing".