Original article published by Mansion Global
Written by Virginia K. Smith
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Even high-profile athletes aren’t exempt from the realities of the real estate market, and both Shaquille O’Neal and Michael Jordan have struggled for years to sell high-priced properties decked out with regulation-sized indoor basketball courts, among other athletic bells and whistles.
For luxury property owners, it’s easy to assume that adding eye-popping amenities to their home is a win-win, creating a custom showpiece to enjoy while they live there, and an enticing hook for an eventual sale. But while features like full professional sports courts, multi-story garages for car collections, or sprawling pools and water slides might make for flashy listing photos, they won’t necessarily be a draw for buyers, and in some cases, can do more harm than good.
“The more specific you get [with an amenity] the more difficult it can be,” said Jennifer Kilpatrick, an agent with Corcoran in Delray Beach, Florida. “And something that happens in this very high-end part of the market is that people overprice, you see it a lot with actors and athletes. At the end of the day, you still have to be cognizant of what things are selling for in your neighborhood.”
An enormous, customized amenity space “definitely reduces your buyer pool,” said Janie Coffey, an agent with Compass in North Florida. “If you’re an owner and planning to build that, you do have to think about [the fact that] at some point you’re going to need to sell, and the general public, even ones with a lot of money, might not need this.”
None of this has stopped luxury property owners from splashing out on impractical but impressive dream amenities, particularly in a year that many spent largely at home, building out their living spaces as full service entertainment, work and athletic destinations.
“I saw a family who built out a big skateboard room with wood paneling for their kids, who weren’t allowed to go to the park during the pandemic,” said Myra Nourmand, a principal with Nourmand & Associates in Los Angeles. “It’s a nice amenity if you have a few kids, but if a buyer doesn’t have kids that are into skateboarding, they’re not going to pay [extra] because the home has a skateboard room.”
For owners who still have their hearts set on adding sport courts or other larger-than-life features to their homes, here’s what to know about how that passion project might play out in an eventual sale.
Navigating a Smaller Buyer Pool
The number of buyers who are in need of tricked-out sporting facilities is unquestionably smaller than the broader pool of luxury home seekers, and brokers tend to deal with this in two ways: First, by targeting their marketing to niche groups who will see certain features as a selling point, and second, by presenting less-enthusiastic would-be buyers with other ways to use the space.
For a Florida property that included a two-story wine room, a full English pub and a pool decked out with a sparkling mermaid motif, “we did a great deal of marketing to the wine community, and for the person that did end up buying the house, the wine room was one of the main reasons she loved it,” Ms. Kilpatrick said.
As for the pool, “It did make it a challenge for some people when they came to see the house,” she said. “But some things are very easy to overcome. We got a quote [on how much it would cost] to take the mermaids out and make it a simple, beautiful pool, which is something the current owner ended up doing.”
While the notion can bruise sellers’ egos, for buyers who aren’t interested in a specific amenity, presenting plans from a contractor or architect can become another form of staging, allowing them to better envision future uses for the space. It’s also a far more cost-effective strategy than removing the amenity altogether in favor of something more universally appealing.
“I never have sellers do something that’s going to be a big expense unless they can get [that cost] out of the sale,” Ms. Coffey said. “And for something so big [as a basketball court], I tell them not to.”
“Even just having renderings of what it could look like after an update is helpful,” Ms. Coffey added. “You get to a point where you want to help buyers find another way to use a space.”
For large athletic spaces, brokers often present the option of re-working them as all purposes gyms, game rooms and even event areas.
“I’ve seen that a lot, where those spaces serve as backdrops and stages for other purposes,” said Emil Hartoonian of The Agency in Los Angeles. “Homes that have regulation tennis courts, it’s such a big open space, you can easily have an event coordinator get in there, tent it up, and transform it.”
The problem becomes more complicated if a large amenity is built out at the expense of the rest of the property, such as taking up an excessive amount of the available outdoor space for one specific use.
“If you have a tennis court and a great yard it adds value, but if you put in a tennis court and now you’ve only got a small yard and pool, that’s painful, it takes away value,” said David Kramer of Hilton & Hyland in Los Angeles. “Now you’re really just looking for a buyer who’s a tennis court person and doesn’t value a yard and a pool so much.”
Bracing Against a Potential Price Hit
While the idea that buyers don’t appreciate their labor of love might be a rude awakening for sellers, realizing that their prized amenity might hurt their bottom line is even more jarring.
“A lot of times, these features won’t appraise, because a true appraisal requires comps,” Ms. Coffey said. “If you’ve got [a full equestrian] barn or a pool with water slides, if an appraiser can’t find other properties nearby with those same amenities, they’ll only add a fraction of the cost of that amenity to the value of the home.”
Buyers who plan to rework an oversized space will also almost certainly factor the cost of future renovations into their negotiations.
“It’s immediately a conversation when buyers are faced with these kinds of homes,” Ms. Kilpatrick said. “They bring in their designers and architects, and come up with how much it’s going to cost to make it their personal custom home, and that number always plays a part in negotiations.”
It cost the owners of an active listing in New York roughly $3 million to build indoor and outdoor basketball courts, but “when I priced the house, I tried to make sure that I didn’t add that $3 million, because that was an amenity for those particular sellers,” said Heather Harrison, an agent with Compass in Westchester County, New York.
“They custom built the home for themselves, and knowing that it wasn’t going to appeal to everyone, I priced it like I would any other 10,000-square-foot Scarsdale home on that size property with a pool and a pool house,” she said.
And while the property has drawn attention from NBA players for its courts, Ms. Harrison said, as far as the expense of adding in that feature: “They’re not getting their money back, that is a fact.”
As with many other facets of home buying and renovations, for owners who aren’t professional developers or flippers, as a general rule, personal comfort and lifestyle preferences should take precedence over strategizing a sale that could happen years in the future.
“People call when they’re making improvements asking, ‘Will this increase the value of my home,’” Ms. Harrison said. “If they’re going to live there for 10, 20 years, they should make the home what they want to make it, and not be so overly concerned about whether it’s going to appeal to someone else. You should do it for yourself and your own pure enjoyment.”
But if you are mulling the addition of a climbing gym or bowling alley, go into the project with eyes wide open.
“Someone might not mind that it reduces the buyer pool, they have so much money it doesn’t matter and they want to live their life,” Ms. Coffey said. “But at least being conscious of that from the start is important.”
