Smart Homes Aren’t Automatic Money Makers as Investments – Mansion Global

Smart home technology has advanced rapidly in recent years, and what was once the province of tech billionaires like Bill Gates has now become accessible to the average American homeowner.

But there’s a world of difference between having a smart home assistant like Amazon’s Alexa keep track of your grocery list and installing a property-spanning system that allows you to manage your lighting, temperature, security and every last appliance, from anywhere.

Wiring your home with smart technology can add up to a substantial investment, but you shouldn’t expect it to pay off in an easily quantifiable way when it comes time to sell.

“At the high end, it’s expected, but it’s not necessarily a financial boost,” said Gil Dezer, president of Dezer Development, a firm behind a number of automated properties in south Florida. “If I don’t have it but a neighbor does, that could factor into someone’s buying decision.”  

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Your home’s smart technology could give you an edge over other sellers whose homes don’t have it, but it’s challenging to assign a dollar value to it, experts say. In a 2018 Coldwell Banker report on smart home technology, over 80% of the 3,000 agents and brokers surveyed agreed that smart home tech can help “streamline” a home sale; 46%said they had worked with sellers who installed automation to boost the curb appeal of their properties.  

“I look at it as something that can help move a home more quickly, especially in a high-end market that has a lot of competition,” said Jonathan Miller, chief executive of real estate appraisal firm Miller Samuel based in New York.

In Malibu, California, for instance, homes promoting smart technology sold 61 days faster than the area’s average in the past year, according to a Mansion Global analysis of data from real estate site Redfin.com. Furthermore, smart homes in Malibu sold in the past year for an average $1,690 per square foot, $300 more than the beach’s overall average, according to the data.

There was also a difference, though less pronounced, in nearby Beverly Hills, California, where the average smart home sold 16 days faster than the posh city’s overall average in the last year. Such homes also sold for about $30 more per square foot than the average.

If you opt to install a smart system, then do so not with the primary objective of boosting resale value, which can be variable and hard to predict, but instead to potentially help your home sell faster—and to enhance your own lifestyle while you’re still living there.

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Why Homeowners are Investing in Automation

The options for home automation run the gamut, from basics like smart, energy-saving thermostats to house-wide systems that allow homeowners to control lighting, HVAC, window shades, and more, from anywhere in the world.

And these days, most high-net worth buyers expect some degree of automation to be in place in homes they consider investing in.

“At the high end, it’s absolutely crucial to have high-end tech,” said Catherine Bassick, senior international real estate advisor for Sotheby’s. “There are people who will remodel an older home and it could be beautiful, but they don’t have the wiring to make it updated for today, and it really does turn off buyers.”

And once the tech is installed, some homeowners say, the enhancements to quality of life are substantial.

“You can’t live without it once it’s installed,” Mr. Dezer said. “I can shut all the lights in my house by pressing one button, open and close doors room by room, lower the shades, put one song on in one room and another in another room.”

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Systems like Crestron, Control4 and RTI offer some of the most elaborate automation, allowing homeowners to remotely manage nearly every aspect of their properties. This is especially appealing to those who spend a significant amount of time traveling and have multiple homes.

Kimberly Rino, an agent with CORE Real Estate Group, a new boutique brokerage in Beverly Hills, cited one client who installed smart home technology that lets him keep an eye on his property when he’s overseas.

“Lighting, shades, heat, and really, everything imaginable, will be managed via an iPad. He’s based out of Israel and can manage his home from there,” she said.

For such homeowners, automation provides invaluable peace of mind when it comes to their properties’ security while they’re away.

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Investing In, and Maintaining, Smart Home Technology

In addition to gauging how automation could enrich their quality of life, homeowners must also figure into their calculus the expense and time investment of installing and maintaining high-tech features. Minor upgrades, like smart thermostats, cost only in the low hundreds; at the high end, hiring a consultant to wire your home for complete control over lighting, shades, temperature, cameras, and more can run into the millions.

But as automation becomes increasingly common, and more products and providers enter the market, prices are expected to drop.

“It was very different five years ago, but today, for $5,000 you can do a lot with home automation,” Ms. Bassick said. “You can have an iPhone that controls a couple of Ring [doorbell] cameras and smart systems like Nest.”

But, she added, some homeowners’ investments in automation can enter the multi-millions, especially for more complex features like controlled lighting. “That’s why people get so excited when a home has all the bells and whistles,” she said.

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There’s also the time investment to account for. The more high-end and holistic systems like Crestron and Control4 require the work of an expert with electrical installation skills and a fluency in cutting-edge technology.

“You could be living with the installer for about three months as he’s programming,” Mr. Dezer said. “The best systems are the most complicated to install.”

Another consideration, given the fast pace of the development of smart home technology, is how to deal with aging equipment. Obsolescence could pose challenges for homeowners who invested in home automation early, and are now planning to sell. Several years ago, for instance, smart doorbells that connected to home phones were popular, but now, fewer people have landlines.

“If you install and go to sell five years from now, I can assure you that the technology will have changed by many multiples,” Mr. Miller said. “The obsolescence factor is significant at this segment of the housing market.”

To keep your tech of the moment and easy to update, a smart bet is to invest in a system that allows for swapping out features that are no longer relevant.

“The best thing to do is put your money into wiring,” Ms. Bassick said. “If you have that, you can change out components as they become obsolete.”

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The Impact of Automation on Resale Value

Since installing home automation can be such a time-consuming and expensive process, many homeowners may expect that doing so will help their homes appreciate.

But it’s difficult to assign a number to the addition of automation. As an amenity, the technology isn’t visible, and therefore the added value is less apparent to would-be buyers.

“If I show a property and it has a smart security system that was a $190,000 job, that $190,000 is not going to be applied to the price of the home,” Ms. Rino said. “It’s not tangible, like having a pool in the backyard.”

Furthermore, the matter of obsolescence could present problems at the time of sale, depending on when the smart technology was installed, and whether the homeowner selected a system that is easily updated.

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Given the rapidity with which home automation is changing—and the possibility that a buyer might consider an existing system out of date–homeowners should invest in the technology to improve their own lifestyles, not their home’s resale value.

“My advice is, do what you want for yourself, but not for resale. By the time you sell, it may not be relevant,” Ms. Bassick said.

Beckie Strum contributed to this story.

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