Does a home theater increase home value? Here's what real estate experts say

If you're asking yourself, 'does a home theater increase home value?', you've probably already researched – and executed – several other ways to add value, and your home is in pretty good shape to sell at a good price. 

Of course, home theaters are also highly desirable in their own right, even if you're not selling yet. One luxury home designer* is reporting that over 80% of its high-end homes now feature a home theater. 

Home theaters clearly are how high-net-worth home owners have solved the problem of being unable to go to the movies because of the pandemic. But is adding a home theater a cost-effective move when it comes to selling? The answer, it turns out, very much depends on the style and quality of the theater in question.

Luxury home theaters add value

The key to creating a home theater that will increase your home value is being very design-conscious. Realtors like to point out that how a home theater is evaluated is unpredictable, and almost always down to the individual quality of the space. 

As Baltimore real estate agent Laura Snyder explains in a blog post for Homelight (opens in new tab), 'some appraisers give a certain value for just the finished space, but not the equipment or theater itself. Others have adjusted the value for the theater, but only if it has raised seating.' She herself will take a home theater into account when evaluating a home only if it's very luxurious. 

Tech experts at HouseTechGuys (opens in new tab) agree, saying that 'you could spend thousands of dollars on a home theater, but it likely won’t change your home’s value if it’s of low quality, in poor taste, or lacks practicality.' 

In other words, you really need a bit more than just a large room that has a screen and some seats in it – you will need to invest in good lighting, as well as the extras that add that luxurious touch, whether it's high-quality upholstery textiles or maybe even a fireplace.

• See: How to create a home gym – everything you need to start exercising in the comfort of your own space

Is your home in the right neighborhood for a home theater?

The other crucial thing to consider before converting your basement into a home theater is whether it's one of those house features buyers want in your area. It turns out that home theaters are a black-and-white home improvement in that it's either absolutely expected by your target buyer group, or it will be a complete turn-off if your potential buyers prefer an empty basement they can convert as they see fit. 

Alex Bracke, of Valor Group of Pearson Smith Realty, explained in a Projector Screen (opens in new tab) blog post that 'in the higher-end luxury neighborhoods we serve, the lack of a home theater can certainly detract from the buyer's perception of a home's value if many other comparable homes they're seeing DO include a home theater.'

On the other hand, if home theaters are not common and not expected where you live, building one could be a big mistake, if your buyers feel that vital space that could have been used to for guest bedroom ideas or as an extra bathroom has been taken away. 

Do home theaters add value?

Using the factors above does help you work out if a home theater will add value to your particular property – but how much? There's no agreed or consistent view, however you can make an educated guess if you compare the cost of a home theater – more on that below – versus the return on it when you sell. 

Home theaters are generally thought to return you around 65% of their original cost. So, if you have spent $20,000 on a home theater, expect it to add around $13,000 to the value of your home. So, yes, it adds value, but a loss in terms of return.

This, however, doesn't take into account the saleability it can bring to your property, as mentioned above. So, if you are looking to get ahead of the home-theater-rich market locally, it may be worth installing one in your home purely to ensure an offer. 

Our advice: speak to your real estate agent before spending out on a home theater with the only aim being to add value to your home. Otherwise, you should only really add one if you really love watching movies and would use it yourself. 

How much would it cost to build a home theater?

How much does it cost to build a home theater? This is a difficult question to answer because there are so many elements than can drive the price upwards. At the lowest end of the scale, a home theater could cost just $500, but this will cover little more than a low-quality widescreen TV or projector. And that, really, is just a TV room.

If you are serious about setting up a home theater that's truly impressive and functions just as well as a movie theater, expect to pay from $5,000 upwards – more typically between $10,000 and $30,000. For a really luxe finish, expect to reach at least $50,000.

* Stat kindly provided by Oakbridge Bespoke (opens in new tab)