Last week, our home was appraised for a mortgage refinance. I asked the certified real estate appraiser if he wanted to know if we had retrofit. He said, “No, it has no impact on the value.” He checked only that the water heater was strapped to the wall.
A few weeks ago, in separate conversations, I asked several leading Bay Area real estate agents whether a retrofit increases the home sales price. Each said ‘no.’ A marble countertop in a half-bathroom would increase the home’s value about five times its cost, but something that would drastically reduce the damage in a quake has zero impact on its price. Could we be this shallow? This is nuts. Until a home appraisal includes the retrofit, we are doomed to delude ourselves about the true cost of home ownership, and the key benefit of retrofit, in earthquake country.
But it gets worse.
Earlier this year, we were asked by a young couple with a baby on the way to about their quake risk. They bought a beautiful 50-year-old apartment in a ‘tenants-in-common’ building in San Francisco. Any insurance or retrofit decision would have to be approved jointly by the six owners, and so they wanted facts to make any case. In addition to securing their china, vases, electronics and glassware, we advised them to get a retrofit quote. They engaged an engineering firm, which submitted an estimate. But the couple couldn’t make heads or tails of it, so the husband showed the quote and the building plans to his father, who happens to be a contractor. Guess what: The building had already been retrofit when it was remodeled as ‘tenants-in-common.’ When the couple bought the apartment, the retrofit wasn’t even part of the sales pitch.
But it gets even worse.
The engineering company that submitted the quote was the same company that had designed the retrofit beforehand.
So, the system is broken.
Not only does retrofit not to add sale value in this market, but perhaps it is even hidden for fear that the mere mention of earthquakes will frighten buyers.
Temblor’s goal is to change this dynamic, to shine a light on retrofit and increase its value. Like any other improvement, a homeowner should know that the money invested in retrofit will be rewarded not only if a quake strikes, but also when they sell.
Ross S. Stein, Temblor cofounder & CEO