# Fireplace insert and home value?



## Billy123 (Aug 22, 2011)

Anyone here in the real estate business?

I was wondering if an investment in a insert does anything for the value of a home? If one spends 3-5K on a new insert or wood stove, does the value change?


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## Pagey (Aug 22, 2011)

I am not a real estate agent, nor do I play one on TV.  However, I would think an insert adds only as much value as it is worth to the next potential home owner.  For someone serious about heating with wood, who is willing put in the time and effort necessary to season his or her wood supply...then it adds value.  For the regular "ambiance burner" it probably doesn't add much value.

In my mind, it's sort of like adding a nice set of aftermarket wheels to a car - to the right buyer, it will make the deal.  For everyone else...they're just wheels.


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## EatenByLimestone (Aug 22, 2011)

I used to appraise homes for a local bank.  They used their own form and did not go strictly off of Fannie/Freddie guidelines.  Fireplaces/woodstoves/inserts were noted, but did not increase the value significantly.  IIRC, we may have given the value 1K *IF* the comparables didn't have a fireplace/woodstove or insert.

As mentioned above, it is the new buyers who will decide if it makes your home more attractive and worth a higher price.  It's the same with new windows, new roof, new furnace, etc.  All important to the buyer, but the appraiser will just note their presence.  When I sold mortgages for the same bank I remember many people upset because they would take equity out for a project, say new windows and siding and have the work done.  They would then come back for more on the next project and become mad when the appraisal comes back without an increase in the value of the house after 9K of upgrades.  These upgrades would certainly make the house more attractive to a buyer though.  

Matt


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## jimbom (Aug 22, 2011)

I am not in the business nor an appraiser, however, real estate valuation is of interest.  Some appraisal guidelines allow for valuation of *unique* energy efficiency created by super-insulation or solar etc.  I believe the metric is documented annual savings times 20 = value for the energy upgrades.  These are guidelines and not universally employed.  And of course, the market sets the price.

A willing buyer might consider the savings from heating with wood and a good agent might be able to sell the times 20 value point.  But I doubt wood would command a 20x premium.


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## joefrompa (Aug 22, 2011)

I'm in an area where wood stoves are seen occasionally, but are not common. The value-add on my home is NOT in the wood insert itself. It's in what I can claim to be my annual expenditure on energy compared to my neighbors. Here's my example:

My house is fairly well insulated and sealed (just re-sided it with foam board and tyvek under vinyl). I have oil-furnace heat, electric hot water, and electric air conditioning. So only energy bills are electric and oil.

In the summer, my electric bill goes as high as $145/month. During the winter, it's about $85-110/month.

I use about 150 gallons of oil a year with my wood stove - let's just round up to $600 a year for oil. My total annual energy bill is around $2000 - rounded up for conservativeness.

This compares to my neighbors at ~$175-200/month for electric and 600 gallons a year for oil. Or about $4,620 per year.

So my house yields an annual savings of around $2,500 per year compared to many of the "comps".

Now to achieve this, you need some effort. Let's say $1,500 a year in wood collection and other efforts. I'm just making up some numbers here for illustration, but the above expenditures ARE real.

Now....this means my house saves over $1,100 a year in home ownership costs compared to a neighbors house - as a result of my wood insert and all the insulation and such.

Now here's the trick:

$1,100/year = $90/month in savings

$90/month is the equivalent to an additional $15,000 in borrowing on a 30-year mortgage.

Meaning: I can price my house up to $15,000 higher than a comp and the buyer would experience about the same true cost of ownership.

In reality: I'd probably get about $10,000 extra if someone were to look at my house, examine my energy bills (which I would share), etc.

What I have put into the house to get this: $2,000 in wood-stove related products. Paid extra for thicker foam and tyvek on my house. The attic was upgraded to r-38. I've gone around and done extensive re-sealing via caulk/weather-stripping. Previous owner installed casement windows. I have a "Off-peak" electrical box that some things are run on, saving a decent amount.

Each of those things is collectively saving me over $1000 a year, so they are paying me, and they'll pay again when I go to sell.

Hope that helps a bit. It's my experience and my best friend is realtor who has basically backed up the assumption I used above - that boiled down, energy savings on a monthly basis should be evaluated against a buyers true cost to own, and increases the price of the house almost equivalent to what the homeowner would be paying for a comp priced higher but without those energy savers.


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## My Oslo heats my home (Aug 22, 2011)

My wife was in RE estate for a few years until 08' when the bottom fell out. She advised me that the value (of a stove or insert in the on market home) is only really considered to folks that are really interested in a stove or insert as a means of heating/supplementing how they heat the home. People who have no interest in wood heat typically look for 'automatic' living by way of the thermostat and the oil delivery truck or gas line from the street. 
As far as value, I'm told there isn't alot of change, maybe 1-2k tops. In this area of Massachusetts there is hardly a call for heating by wood compared to other fuel types.


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## begreen (Aug 22, 2011)

It depends on both the location and the installation. If it is in an urban area that rarely loses power the desirability may be less, especially if alternatives exist like natural gas. If the insert is an old smoke dragon, slammed into the fireplace it would be viewed as a liability. If it is a rural area where power goes out often in winter and was a documented, professionally installed system with a liner, then for some it might be considered an asset. But this really depends on the buyer.


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## jimbom (Aug 22, 2011)

In a Missouri publicly owned utilities system, you don't have to guess what your prospective house purchases energy costs might be.  The information is available via the sunshine law.  Highly recommend you avail yourself of this information once you have narrowed down the homes you like.  It takes some judgement, ie little old lady by herself vs home full of teenagers etc.  But there are some real shockers in our town.  What looks like nice new construction can be an energy hog.  And, there are some old homes that are very tight and energy efficient.  If you are in that situation, you could sell your inserts value by working up some energy comps.


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## joefrompa (Aug 22, 2011)

Almost all the nice new construction around me (typically 2500-3500 square foot homes) blow me away with their monthly energy bills. I'm talking $400-600 a month on average. I don't even know how people can pull that.


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## begreen (Aug 22, 2011)

In a new house there is no excuse for high heating bills, but a lot of contractors put this as low priority in spec houses. Cathedral ceilings with lots of glass sells a house easier than tight construction. FWIW, our Dec/Jan bills were in that range when we first moved into this old farmhouse. It was painful.


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## mhrischuk (Aug 22, 2011)

You can't go by how much you save because of wood burning stoves. I would guess the majority aren't interested in collecting, storing and carrying wood around. That takes away from the value IMHO.


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## joefrompa (Aug 22, 2011)

You don't sell the steak, you sell the sizzle. You sell it based upon the premise that this house uses less than 1/2 the oil of it's neighbors - while owners get to enjoy the warm,glowing ambiance of a crackling fire in the cozy living room. Which is also a source of heat & cooking in case of power outages. 

That's worth $60 a month to alot of people - or about a $10,000 increase in base price of the home.

This is all dependant upon the base price of the home anyway. A $100,000 home won't get a $10k increase from energy savings/wood stove. but a $400k home might - that's a 2.5% increase in home value due to significantly better insulation/sealing and lower energy bills along with an attractive option (wood burning stove).


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## mhrischuk (Aug 22, 2011)

Lots of people in 400K homes aren't interested in the woodwork.


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## begreen (Aug 22, 2011)

A local realtor answered this question a few years back in the newspaper. I tried to google the article but haven't been able to find it. It was her opinion that generally a woodstove/insert does not add to the homes value and often detracts from it due to numerous factors.


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## mhrischuk (Aug 22, 2011)

BeGreen said:
			
		

> A local realtor answered this question a few years back in the newspaper. I tried to google the article but haven't been able to find it. It was her opinion that generally a woodstove/insert does not add to the homes value and often detracts from it due to numerous factors.



Similar to inground pools depending on where you live and the current buyer profiles in your area.


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## Stump_Branch (Aug 22, 2011)

My thoughts exactly. I will have to install a new furnace (oil) before i sell the house. I bought with this intention as it was a foreclosure, i a first time home buyer etc. When considering, folks told me to look into a wood furnace...i would have no problem. However i cant see alot of people who would come to the house and want to buy knowing it. I would think that even if i had ten plus years of wood sitting in perfect storage, basically free heat for someone...they wouldnt want to move wood indoors and stoke it...

Better off selling the stove seperatly when you move to get money out. Unless you find that right wood nut like us around here.


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## My Oslo heats my home (Aug 23, 2011)

BeGreen said:
			
		

> A local realtor answered this question a few years back in the newspaper. I tried to google the article but haven't been able to find it. It was her opinion that generally a woodstove/insert does not add to the homes value and often detracts from it due to numerous factors.



+1  about the same here


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## zknowlto (Aug 23, 2011)

Consumer Reports ran an article not long ago that claimed, in the current housing market, that there was basically no home improvement you could make that would increase the value of the your house more than the initial cost of said improvement.  

When my father purchased his current house approximately 10 years ago, one of the first things he did was have the fireplace insert removed (he didn't like the look of it).  From personal experience, my wife and I definitely rejected a house we looked at because of the wood stove.  My wife didn't like the distinctly "country" decor it gave the living space.  I, growing up in a house where we regularly used our masonry fireplace, didn't understand the advantage of having a stove.  

You might get lucky and find someone who is really looking for a insert or stove and will pay for the privilege.  My intuition tells me, however, that if you're considering a stove/insert primarily as an "investment", you should put your money elsewhere.


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## Bocefus78 (Aug 23, 2011)

My family sells RE and has for 25 years.  If you want a general answer, no increase in value is given. I suppose this can change by area, but in my market (Central Indiana), it doesn't change a thing.  Most people these days look at inserts as something ugly that they will have to remove or the house is going to burst into flames. He77, they want remote control gas fireplaces around here! The have no clue as to efficiency, $$$ savings, and mostly dont care. To them, its ugly. Now, if your particular buyer knows wood heat, they still wont PAY more, but they will look at your home before one without an insert/stove.  Kinda like 2 twin houses....one with granite countertops, one with laminate. Same lots, same everything......including price.  Which one would you buy?  Whoever said you have to sell it against the competition, nailed it. I would advertise "seller will remove insert and return open fireplace to operating condition" and that way you get both types of buyers attention. It's a small price to pay to get a buyer in most markets these days.


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## mhrischuk (Aug 23, 2011)

If I was looking at the home I would use the wood stove a little as a negative in my conversation to help get the price down... even if I loved it!


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