Appraisal House Blog

The Benefits of a Beautiful Outdoors
June 1st, 2009 11:21 PM

I was perusing the June issue of Money magazine when I came across a short article entitled "The Benefits of a Beautiful Outdoors".  The gist of it was that good landscaping adds about 10% to a homes value according to a Michigan State study.  Normally I would have just laughed at that and moved on, but several days earlier I was reading a blog post on Activerain where a realtor had asked a similar question, that she had heard that 10-15% statistic (although from a different source).  So now I'm going to have to post something to make sure everyone understands that 10% is NOT a good figure to be telling homeowners.

First of all, lets use some common sense here.  If you are selling a $500,000 home with typical landscaping (typical for the neighborhood), and your next door neighbor has the exact same house, exact same finish, etc., but has really done some nice landscaping, do you really think he is going to get $550,000 for it?  Very doubtful.  In most neighborhoods the differences are relatively minor.  The only way I can see that large of a difference occurring is if your yard is a weed-invested, dead grass, no shrubs or trees, dusty mess with a bunch of wrecked cars on blocks in it -- very inferior to the "average" home in the neighborhood.  And the neighbors house would have to be substantially above average.  Maybe in an ultra-premium neighborhood where everyone has their own gardeners, but for the 99% of the homes out there, not so much.

The problem with extensive landscaping is the upkeep.  I've done appraisals on homes where the homeowners insisted on giving me a map of the plants and shrubs along with a history of the design and implementation of the landscaping.  These people are pretty much professional gardeners, and they enjoy spending 10 hours a week pruning and maintaining -- it's their hobby.  MOST BUYERS DO NOT WANT THAT COMMITTMENT.  So the fact that you spent $25,000 in landscaping your $150,000 home, while a testament to your love of horticulture, doesn't mean that you will get that much additional value out of it.  For most typical subdivisions, I doubt it would get you more than maybe an additional $5,000 in value.  Sorry, but that's what the market tends to show.

Now, about that study.  I found the synopsis of it here.  In a nutshell, they took a picture of a house, then computer-enhanced the yard in multiple designs to show a variety of options; large shrubs, small shrubs, intricate designs, standard designs, etc.  They then surveyed people at home and garden shows across the country and asked them how much more they would pay for the different versions than from the base house. 

To me that is a pretty flawed methodology.  You're asking random passerby for a definitive number concerning a property that is not in their market, that they have no familiarity with, and that they have no particular attachment to -- no "skin in the game".  I think most realtors would agree that if you picked up a random person and drove them through a neighborhood and asked them how much they would pay for some of the houses, the difference between that and someone who actually wanted to buy in that neighborhood would be substantially different.  Similarly, asking an interested buyer standing in front of two duplicate homes, one with superior landscaping, would likely not get you an offer with a 10% premium. 

So in summary, DO NOT tell sellers to spruce up their yard in order to add 10% to it.  As most realtors know, you want to be similar to or SLIGHTLY above average to get top dollar.  As long as the landscaping is similar to the neighborhood, there is no need to add to it other than some flowers for curb appeal - the "petunia factor".  If you enjoy gardening and love to work in the yard, by all means go ahead, just understand that like a pool you will not get a high percentage of your money back out of it, so do it for the enjoyment.  

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Posted by Mike Lay (Austin Area) on June 1st, 2009 11:21 PMPost a Comment

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I also saw the 10% comment and shook my head. The landscaper I recommend to people tells me that$5k is about average for his flower bed jobs on middle class houses. Anymore is overkill. His average job on high end properties is a $9k install. This doesn't cover new sod and trees. Curb appeal definitly brings in more buyers though; which is crucial in this market.

Posted by Mike Russell on June 25th, 2009 5:47 PM


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