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Are Smart Homes Actually a Good Investment?

Smart-home products are dropping in price, but they still aren’t cheap. Curious to find out if money sunk in smartening up your house is a sound investment, we talked to Angel Piontek, a residential real-estate agent with 15 years of experience and the vice-president of marketing for real-estate firm Coldwell Banker Elite in Fredericksburg, Virginia. We asked her whether outfitting your home in the latest and greatest in smart-home tech can help boost its resale value.

If I install hardwood floors or put in marble countertop, I know that eventually I’ll get some of that money back if I sell my house down the line. Does that same thing hold true for smart-home and home-automation technology?
I can’t definitively say yes to that. I think it’s really on a case-by-case basis. It depends on what you have installed. If you have a Control4, whole-house automated system that has some real value and you paid $12,000, that may have some value when you sell it. But if you’re talking about a $200 Nest thermostat, or if you paid $1,000 for the smart products inside, I don’t know that you’d necessarily see the value monetarily when you sell it. But there are other things you should consider when selling your house if you have those products.

What are the other things you should consider?
It may or may not increase in actual monetary value, but it may facilitate a faster sale. Outside of the luxury market, it’s a new niche for us to consider. It brings a differentiating factor when you’re selling a house. I live in a subdivision and every house is similar. They’re all four or five bedrooms, three-and-half baths on a half-acre lot. You can bring that differentiating factor with a smart home and talk about the lifestyle that it brings and the savings it brings. The core of the smart home is about the service, right? So you can show how it will change and affect your life and how you interact with your house. If I walk into four houses in the same neighborhood, and one has a Nest thermostat and the agent has educated me that it could save 10 to 12 percent in my heating and cooling, that’s going to stick out in my mind. While the other houses maybe I’m going to forget about.

The thing with having a smart home is, you have to work with a listing agent that can convey those benefits because if you don’t, it might as well not even be there — it just doesn’t matter. If a buyer’s agent is walking through the house with their buyer and they don’t know that specific product, they’re not going to talk about it. So when you are listing a property, you have to call out these features. When we list smart homes, by the Nest thermostat I’ll have a little laminated placard that says, “This is a Nest thermostat, and you can get more information here.”

Getting a bit more granular, if you had an ideal home to sell, are there things that people can do that seem to really interest buyers?
When it comes to smart homes, if you’re going to consider doing it, you can spend $1,000 and have enough products in there to make a difference. But I would choose products that the consumer knows and is familiar with. Like Nest, of course, or Ring doorbells, stuff like that. That will resonate with buyers. When they hear the name, they know exactly what it does, so you don’t have to do a lot of explaining. Ease of use and familiarity are really important when you’re trying to use smart-home products to market that house.

On the flip side, are there smart-home products that can actually make it more difficult for a house to sell?
Yeah. The one question we get most often — if someone does have a concern — is the data-privacy issue. That’s always going to be a concern. Or if a potential buyer doesn’t have these products already in their home, they’re afraid that it’s going to be too complicated to figure out. As an agent, we have to educate the buyer. We’ve actually put a TV in a house with a loop playing of some of the smart-home features in the house.

You’ve been working long enough to see the smart-home market develop. How’s that evolution looked over the past ten years or so? What have you seen people moving toward? What are sellers starting to bring to the table more often?
I got my license in 2003, so I’ve seen the ebb and flow of the market. When I got my start, it was a lot of fixer-uppers. Everyone was interested in flipping a house because the market was hot. Now, more people are interested in move-in-ready homes: Homes where they don’t have to spend every single weekend fixing it up. And part of that evolution is having devices that make homes better to interact with and more convenient. I think that’s what people want now: safety, security, and convenience. Having these smart-home products available, they’re a lot cheaper now than they ever were, and it’s a lot easier to add those products in there.

So the bottom line is that there probably isn’t going to be a return on investment on smart-home technology, but there are benefits down the line if you do decide to sell your house?
Yes. If you have $1,000 of smart-home products in your home, I don’t know if any seller should expect to get that money back because it just wouldn’t happen. When an appraiser comes to look at the house, they’re going to look at the basic stuff: the number of bedrooms, where it’s located, those basic features. Maybe if there’s a swimming pool, an appraiser might add value for that. Some won’t. Like I said, if you had a high-end Control4 system where you decked out your whole house, that probably will add some value. But I can’t say how much that would be; it really depends on the market and the appraiser.

When selling a smart home — in real estate you have what’s called “real property” versus “personal property” — it depends on how it’s affixed to the house. If it’s an appliance that the house needs, it’s probably going to be real property and it’s going to convey [or come with] the house when you buy. A lot of the time with smart devices, it’s not necessarily going to convey. Your Alexa, your Google Home, even your Wink hub that controls all those devices, that may not convey. As a buyer, if you want those, that has to be in writing, just to make sure. Otherwise, it’s going to be considered personal property.

We tell sellers, “If there’s something in the house that you don’t want to leave behind when you sell it, just take it out. Replace that Nest thermostat with a regular one.” It just creates a lot of issues later on. The buyer sees the Nest during the walk through expecting that the Nest is going to come with the house. It’s important that everyone is clear on what is transferring during the sale. And that transfer is important, too. Like the August lock, for example. The buyer isn’t going to be able to use it unless the seller resets it when they leave. Both sides need to make sure that stuff is done before they close.

This transcript has been lightly edited and condensed for clarity.

Are Smart-Home Products Actually a Good Investment?