What is a pub shed anyway?
I was scanning some online articles recently when a story about pub sheds caught my attention. It turns out that a pub shed is just another variation of the she shed but consists of converting the shed into a bar with seating, a bar, a t.v., and of course a beer tap. After reading the article I became even more interested in what people were doing with sheds to improve their homes.
Seems like adding additional living areas to your home has become quite the rage with the shed being used in a lot of creative ways. They go by different names like she shed, pub shed, party shed, and he shed among other things. The cost of buying the shed and modifying it to your liking can range from around $1,000 to upwards of $20,000 depending on how serious you want to get.
Everyone is getting in on the action and there’s even a new series about sheds called “He Shed, She Shed” that helps those eager to build the ultimate shed. Many of the articles I read discussed how these outdoor living areas would add more value to your home. Because I’m an appraiser, my appraiser sense (similar to spidey sense) kicked in. Anytime people talk about improvements that add value to a home the wheels in my head start turning and I immediately start analyzing whether real value is actually added.
Since it appears so many people are interested in building these outdoor areas I thought that I would share with you how they would be looked at in a appraisal, so lets get started.
The bottom line is that these improvements are basically just a shed. When an appraiser considers the amount of value that a shed can add to a property several things are taken into consideration.
Any improvements included in an appraisal assignment need to be considered real property, and what that means with a shed is that it should have a permanent foundation. If the shed is sitting on blocks, and can be moved, it is considered personal property. This is the same way that appraisers look at above ground pools.
If you want the shed, or any other type of storage building, to be included in the real estate’s overall value, and therefore included in the appraisal, it will need to be permanently secured to a concrete slab or to a pier and beam foundation. The recent episode of “He Shed, She Shed” that I watched showed one of the sheds the participants had. It was only sitting on concrete pads and could not be considered permanent.
After the shed is installed on a permanent foundation then the appraiser will start looking at the quality of the construction, type and extent of improvements, and the value added by comparing it to other similar properties. This is where it gets tricky because, as in other types of improvements, you will not get a dollar for dollar return on your investment. For example, the person that spends $20,000 on their dream pub shed may not (probably not) get back that much out of their home when they sell or when it is appraised.
There are also some other factors that appraisers must look at when looking at how much value a space contributes, so let’s take a look at those factors.
Can the detached pub shed area be included in the square footage of the home?
If you pass the first test of the pub shed being permanently attached to the real estate, then we need to look at whether the area can be included in the total square footage of the home. Since there can be such a large variation in the quality of construction of one of these sheds we should look at which ones that can even be considered “living area”.
Many of these sheds have extensive features added but the unit itself may not even have an interior finish similar to the main residence including a source of heating and cooling. The sheds that have no interior finish or heating and cooling will just be classified as a shed with no consideration given to the personal property features they have.
If the shed does have a nice interior finish and heating and cooling then there are still some factors that need to be considered. Since the shed is detached from the main home it cannot be included in the overall gross living area of the home. ANSI standards limit the area that can be included in the overall square footage to those parts that are attached to the main residence.
It’s important to consider how buyers might consider the additional area as well. In my 25+ years of experience most of the people I have talked to do not consider a detached area as part of the main residence, but that will vary by area.
So generally speaking there are some basic things we can take away from our discussion. In order for a pub shed, she shed, party shed, or any other shed to be considered as part of the total value of a property it must be permanently attached to it.
In addition to a permanent foundation, the improvements in the shed must be built in, and it must have an acceptable form of heating and cooling that meets code and meets the expectations of buyers in the subject’s market.
Even with these requirements the amount of value the improvements will contribute will depend on what buyers are willing to pay. An appraiser’s job is to analyze other sales with similar improvements to determine what buyers paid for these additional features so the more this craze catches on the more sales appraisers will have to study and determine the amount the buyers paid for the feature.
At best, these sheds on steroids can be thought of as an extension of the porch living area and rarely would be included in the total gross living area of the home. Do you agree with this?
Are you considering the addition of a she shed or pub shed? If so you may want to think about some of the things I’ve discussed. If you’ve built one, and sold your home, I’d be interested in knowing if you got your money back from the investment. Please leave a message and let’s keep the conversation going.