Some thoughts on cigarettes and property value

Do you smoke? I’m not trying to sound like I’m on a high horse, but I definitely don’t smoke. I think I was cured of any desire to do so as a kid after being in the car on many occasions with my late Grandma as she dragged her Virginia Slims with the windows rolled up. I guess it was a blessing in disguise, right? Anyway, whether you smoke or not, used to smoke or will smoke, let’s talk about the impact of cigarettes on property value. I’ve inspected quite a few “smoke homes” through the years, so I was glad to answer a question from a REALTOR friend about a home she is listing. Here is our conversation below (I’m sharing with permission). This post is not meant to be anti-smoker in any way, but only weigh a legitimate issue on how smoking inside can impact property value.

woman smoking indoors 2 - purchased and used with permission by Sacramento Appraisal Blog

Question: Do you have a generally accepted rule of thumb for negative adjustments to value for a house that has a pungent cigarette smoke smell? I’m having trouble convincing a seller that this is a big detractor. Without the smoke smell the house would probably sell around $285k, but I think a more appropriate value would be around $265k given the odor.

Answer: There is no standard adjustment because it depends on the condition of the house as well as what the market is doing. But usually a house that smells like cigarettes will sell toward the lower end of the price range for a few reasons. First, there is a smaller pool of buyers. In fact, many buyers simply wouldn’t purchase the home because of the pain of getting rid of the smell. Secondly, the house may likely be outdated already. I have found many “smoke homes” to have older carpet and an overall dated or retro feel. This means the house will probably not compete at the upper end of the market anyway. Lastly, a cost-to-cure and/or discount is in order. How much would a buyer spend on a property if the carpet has to be replaced and the interior has to be painted? A 20K adjustment is probably very reasonable when considering the cost to replace or very deeply clean all carpet and re-paint – not to mention the house may already be outdated anyway. One last consideration though is what the market is doing. If this house hit the market in early 2013 when real estate was acting like it was hyped on steroids, there would probably have been slightly less of a negative reaction because buyers are willing to look past some negatives when inventory is really tight. But now that the market has shifted, it’ll probably be much more of an issue.

Questions: Anything else you would add to my answer? When was the first time you were exposed to smoking or cigarettes? Comments are welcome below.

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Comments

  1. says

    Great question. The few “smoker” homes I’ve seen lately were already priced below market as “fixers” and needed paint and carpet anyway, so its hard to distinguish for the extinguished.

    BUT, a few weeks ago we met with a buyer who had just refused to offer on a superbly upgraded home in a $600K project.due to the strong scent of curry. Was the home sold at a discount?… NO.. it sold at the top price in the project as there were enough buyers available who the curry scent was not an issue.

    Depends on the state of the market. –

    • says

      Exactly, Jeff. It seems like most “smoke homes” are outdated already, so they usually compare well with other fixers. Interesting story on the curry and very telling how some things impact certain buyers but are not a big deal for others. I actually love the smell of curry. Did this house have a kitchen set up in the garage too? That seems common when curry is prominent.

  2. says

    Good Morning Ryan…
    Very good article, as a former Realtor and now a Mortgage Consultant, I certainly agree with your assessment of the reduced value…
    Hopefully the Home~Owners / clients, will step outside, year round and smoke out there… May even help them reduce the number of cigarettes, that they smoke…

    • says

      Thanks so much Ron. It sounds like you have unique insight as a former REALTOR. That must help out quite a bit. You’re right that most people smoke outside these days. That’s a good practice on a few levels.

  3. says

    Hey Ryan,
    Interesting coincidence that you published this on the same day that CVS announced that they will discontinue the sale of tobacco products in all of their stores nationwide leaving 2 billion in annual revenue on the table.

    There is no question that smoking inside a home lowers it’s value. The smell of smoke is gone from office space, restaurants, and bars for that matter. The smell is simply not part of any indoor situation that I can think of in the State of California, let alone a homes!

    • says

      I know, Michael. I’m thankful to CVS for waiting to launch their news just after my post went live. 🙂

      Well said. You are right that things certainly have changed. It seems most smokers have an ash tray on their porch or patio instead of inside. Your comment does remind me of how silly it was to have smoking sections in airplanes and restaurants – as if the smoke would only stay on that side of the plane or room. How things have changed!

  4. says

    Great post on a topic that I am sure many people think about but don’t really talk about. I’m sure there is also a group of buyers that have babies or toddlers that do not want there child exposed to the odor and potential allergy problems. This would reduce the buyer pool by a pretty large amount if families with small children were eliminated. I saw the other day on facebook where an appraiser was asking agents about homes that sold that were owned by smokers so it seems to be an important topic.

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