Definition of "Amenity value"

Kim Lan  Rosewall real estate agent

Written by

Kim Lan Rosewallelite badge icon

Money Realty Llc

The term amenity value refers to the worth or pleasant feeling added by using or seeing something. The amenity value definition would be the value that an individual amenity adds to the property. But what is amenity value, and what is it used for?

What does Amenity Value Mean?

An amenity value is a type of evaluation generally used to determine whether the amenity cost is worth the benefit it can bring. The term amenity value is used in two different ways by assessors. Either when natural resources are considered amenities or when investments are added to increase the property’s value. We’ll take each situation individually and explain them both in a moment but first, how does amenity value work for properties.

When we have a single-family home, every potential buyer will take a look at the list of amenities that the property has access to. These amenities can be public or private, and how the valuation of these amenities is done differs.

What is Amenity Value in Real Estate?

The most common use of amenity value is to determine the value of natural resources as they are, compared to their value if they are harvested. The amenity value added to residential developments by a virgin forest located nearby determines if the revenue is higher than the harvested timber’s value. When considering this, the valuation must take into account the fact that the forest’s value can decrease if it is harvested.

In this scenario, the forest has amenity value, meaning that it adds appeal for buyers or lenders. This appeal can impact the property’s market value. To determine a forest’s amenity value for a property, the assessor compares the value of that particular property to real estate comparables that do not have a forest nearby.

Amenity value in real estate is also applied to rentable, built, or differentiable amenities. Adding amenities to a property for the added value that they bring isn’t always simple. The more, the merrier concept can not be applied here because there is such a thing as too many amenities. Being somewhere in the middle, not too few, but not too many, should be considered reasonably safe for investment purposes. The real estate investor or seller should also look into preferred amenities for the property and its potential buyers. 

For example, in an office building, amenities such as recreation rooms or rooftop lounges would positively impact the unit’s fee, but a pool might be useless. For residential properties, a theater room or pool would be a plus, while an escalator is useless. Public amenities for residential properties like a playground, school, or a forest also impact the HOA fees.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

The Multiple Listing Service (MLS) is an exclusive database of properties created by real estate agents and brokers. The idea behind the creation of the Multiple Listing Service (MLS) ...

Database program that has real estate listings including property photographs. Real estate computer software allows real estate agents and brokers to search for a particular listing by ...

Architectural plan which may include blue prints of a property project. Designs must meet technological and zoning requirements. ...

Expected market value of property if sold today. ...

The accelerated cost recovery system is a depreciation system for tax purposes mandated by the Economic Recovery Tax Act of 1981. In 1986 the Accelerated Cost Recovery System (ACRS) was ...

Room containing a toilet and wash basin, but does not include a shower or bath tub. ...

When talking about the open space ratio we are referring to a term that is used in zoning laws and regulations. The open space ratio is a term used to measure open space on a developed land ...

People often ask themselves, what does interim mean? By definition, interim means a break or pause in a particular activity. As an adjective, interim means a temporary, provisional, or ...

If you have been wondering what can cause a market failure, the most common answer is externalities. An externality is an indirect cost or benefit to a neutral third party that comes from ...

Popular Real Estate Questions