Smart Homes Gain Momentum in Real Estate Market

smart homes in real estateYou can’t go too far these days without seeing something that’s “smart” and seemingly integral to our lives, from our phones and TVs to our cars, watches, and on a much larger scale: our homes. Now smart homes are being retrofitted with technology that allows owners to control their lives remotely.

So what exactly is a smart home? Coldwell Banker defines a smart home as a home equipped with smart products connected through Wi-Fi or Bluetooth to control or automate the functions of a home. That includes “thermostats that learn to adjust the temperature automatically based on your schedule, lightbulbs that you can control from your phone, doors that automatically lock when you leave the house,” the real estate agency said in its Smart Home Technology website.

Anything you can control from your smartphone remotely qualifies, including computers, audio/visual, surveillance cameras, landscaping elements, air quality monitors and smart appliances.

The National Association of Home Builders coined the term “smart house” in the early 1980s to refer to an automated “intelligent” home that “responds to the dweller’s needs and desires by adjusting lighting, temperature, even ambient music.” The benefits were “safer, more comfortable, and more economical dwelling.”

Today, the smart home has evolved as a result of relatively inexpensive tech devices one can operate via a smartphone or tablet with data accessible online through a centralized interface. Security and energy management remain the biggest reasons homeowners and renters want smart home devices, according to the National Association of Realtors Field Guide to Smart Homes.

Is paying for a smart home worth the investment?

Coldwell Banker Real Estate 2016 Smart Home Marketplace Survey found that nearly half of consumers polled (45 percent) either owned smart home technology or planned to invest in it. And more than half of homeowners (54 percent) would purchase or install smart home products if they were selling their home and knew the devices would help sell the home faster.

Among those who would invest in smart home products, 65 percent would pay $1,500 or more, and 40 percent would pay $3,000 or more to make their home “smart.” The interest in investing in smart technology is slightly higher for millennials.

But smart home technology is not only for the affluent, the survey found. Americans with a household income of $50,000 to $75,000 are adopting smart home tech at nearly the same pace as those with incomes of $75,000 to $100,000.

“Smart homes are not necessarily more expensive than other comparable homes,” said Angel Piontek, a realtor associate with Coldwell Banker Elite in Fredericksburg, Virginia.

“For under $1,000, you can invest in multiple products to make your home a smart home from a selling standpoint. In today’s market, a home can be a smart home at any price point and buyer income level.”

For that reason, Piontek believes investing in a smart home is worth the cost. “Currently, it creates a significant differentiating factor in the market which may help your home sell faster.”

In another study last year, Coldwell Banker found that 57 percent of people who want a move-in ready home would consider an older home updated with smart home technology. Forty-four percent of those who want a move-in ready home said that smart home technology was a must.

“The ubiquity of smart products has rapidly increased over the past few years,” Piontek said. “In the luxury market, a home is almost at a disadvantage if it doesn’t have smart home elements. It is common for a high-end home seller to invest in smart products just to compete in the market. We will see the same expectation at every price point in the near future.”

The NAR paints a different picture. The vast majority of clients, about 80 percent, aren’t even asking about smart home technology. A little more than half weren’t familiar with what’s available, according to the NAR’s 2016 Smart Homes & Realtors report.

Only 42 percent of Realtors said their clients were interested in smart home devices and only half that number—22 percent—were interested in whole home technology. Similarly, 42 percent of Realtors are interested in a NAR Smart Home certification while 22 percent are not. Those interested tend to be full-time, middle-aged agents with more than 16 years of experience.

The statistics offer a great opportunity for NAR members to educate themselves and their clients about smart home technology, said Chad Curry, managing director of NAR’s Center for Realtor Technology.

Not only should agents test out some of the products, but they should also help their clients find rebates and rewards for smart tech offered by some insurance and utility companies, Curry said. Smart home products also make good closing gifts.

Communicating with clients about smart homes

Piontek offers these tips for agents advising clients about smart homes:

  • Keep your target buyer in mind. You should be able to give your client the general demographic information of the potential buyer for the home. What would that buyer like to see in the home? What kind of conveniences would they want?
  • If clients have an older home, advise them to think about products that will increase the buyer pool by making improvements to older systems. For example, if the older home has a radiator, install a smart radiator valve to control the valve remotely and track energy use.
  • If the client lives in an area where there are frequent water shortages, investing in a smart water meter will create that differentiating factor most buyers will notice.

“Simply having the products in the home isn’t enough,” she said. “The key is to work with a real estate agent who knows the value of the products and how to market them. If an agent can’t properly convey the value of a device, it may as well not even be there.

“The onus is on the listing agent to educate buyers agents showing the property so they can, in turn, show their clients.” Some smart products may be considered personal property, so buyers need to be aware of what is being offered and include it in the contract, Piontek said.

According to the NAR Smart Home report, security and privacy were the top issues Realtors discussed with clients, 36 percent, followed by cost, 31 percent.

Regarding consumer priorities: 37 percent of Realtors said clients find locks on smart home devices crucial, followed by lights, at 29 percent, and thermostats at 26 percent. In Coldwell Banker’s survey, most of those surveyed, 76 percent, thought having one category of smart technology wasn’t enough to consider it “smart.” Sixty percent believed a home needed to have at least three categories of smart technology to be considered smart.

Curry said the biggest problem he sees with smart home technology is interoperability, how the devices work together. For example, if the smoke alarm goes off, a camera should be able to tell that the smoke is from someone cooking, disable the alarm and adjust the thermostat to remove the smoke.

To learn more about this specialty market, read McKissock’s blog: “Appraising Smart Homes: Does ‘Smart’ Really Matter?

 

 

Article by Roni Robbins. Roni Robbins is a 30-year journalist with business, environmental, and real estate specialties. She wrote real estate articles for Mother Nature Network, the Daily Report, and Atlanta Journal-Constitution. She also reported for the New York Daily News, WebMD, and Adweek with stories picked up by the Huffington Post, Forbes, USA Today, and CNN. Find out more about Roni here.

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