5 things to remember about the value of landscaping

How much value does landscaping really add? Nothing. A minor amount. A huge total. I’ve heard it all when it comes to what people think landscaping is worth. Today let’s kick around some ideas from an appraisal standpoint. Anything to add?

landscaping in appraisals - sacramento appraisal blog

5 things to remember about the value of landscaping

1) The myth of no value: I’ve heard the sentiment from some real estate professionals that landscaping does not count toward the value. My take? Landscaping is often very important to buyers – especially when it is extensive or highly expected in certain neighborhoods.

2) Front vs back: My sense is front yard landscaping does not sway buyers like the backyard does. I’m not saying it’s not important or curb appeal doesn’t matter (it does). I’m only saying the rear yard tends to make a much more significant impact on value since people spend more time there.

3) One size doesn’t fit all: The value of landscaping will vary significantly depending on the price range and neighborhood. For instance, a few years back during the height of home flipping activity, it was common to see flippers at the lower end of the market do very basic cosmetic landscaping in the front yard while doing almost nothing with the backyard (seriously, rear yards were at times just dirt or bordering on unkempt). In contrast, higher priced homes were getting full-service attention in both the front and backyard. Why? Because the market had different expectations by price range and the investors’ sense was spending the money was worth it in some neighborhoods and not others.

4) On par after huge money spent: Sometimes owners will spend good money to redo an unkempt yard only to expect a huge price premium. The problem is post-landscaping the owner is now basically on par with other homes in the neighborhood rather than in a position to command a premium. This is not easy to swallow, but it’s important to recognize in order to avoid overpricing. 

5) Dollar for dollar: While we like to get a “dollar for dollar” return on our improvement projects (at the least), that’s not always possible in real estate. So when an owner says, “I spent $125,000 in my backyard” and otherwise similar homes are selling for $700,000, can we really expect this property to be worth $825,000? That’s probably not realistic, right? Most of all though, let’s find comps with incredible landscaping and let those properties tell the story of value. That way we are letting actual market data speak to us to set the tone for what buyers have been willing to pay for similar landscaping. Isn’t that better than shooting from the hip about what landscaping may or may not be worth?

Case-in-point for an incredible backyard: While appraising in the Natomas area of Sacramento I came across a house with an incredible backyard. I ended up NOT using it as a “comp” because this property sold about 10% higher than others because of the built-in pool, custom covered patio, built-in BBQ, outdoor fireplace, and everything else in the yard. I’m not calling all of these things landscaping of course, but at the same time let’s be realistic to think buyers may lump some of these items in the same category. Anyway, at times it’s tempting to give a token $10,000 upward value adjustment when we see a nice rear yard because that’s what a mentor taught us to do, but sometimes the market is willing to pay more like 10%. In this case otherwise similar homes seemed to come in around $450,000 and the subject sold for $495,000 (there were 7 offers). There was one other sale at $485,000 and it also had a sweet backyard. As you can see on the graph, the incredible backyard seemed to really matter.

incredible landscaping - sacramento appraisal blog

Here is what the rear yard looked like. I could live with that. You?

house with amazing rear yard - sacramento appraiser

Remember, let’s find a few examples of extensive rear landscaping (or an amazing backyard) if possible so we don’t base our perception of value on only one sale. After all, what is that one sale sold too high or too low?

The Washington Post: Two weeks ago I wrote a post about the ugly side of appraisal fees, and as a result Ken Harney of The Washington Post interviewed a handful of appraisers (including me) for a piece that went live today. Ken is a nationally syndicated columnist, so the conversation that took place here is going to be moving to a much bigger level. Thank you everyone. Here is Ken’s article.

Questions: What stands out to you most about what I mentioned above? What is #6? Did I miss something?

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Honored with the Affiliate of the Year award

I’m excited to announce I was honored with the Affiliate of the Year award a few weeks ago from the Sacramento Association of Realtors. This award is given to one non-Realtor each year, and this year it was given to me. This was not expected, and I’m really blown away. I’m very proud to hang this plaque in my office, and I hope you can join me in the excitement. Thanks everyone.

An award from SAR - this is me with Chris Clark

An award from SAR - what an honor

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A focus on real estate training in 2015

This year I had 35 speaking engagements. I visited many real estate offices, gave presentations to lenders, spoke at the Sacramento Association of Realtors several times, taught a CE course with REAA, gave a presentation on blogging for the Sacramento Business Journal, and even taught a class this week at Sacramento State. I figure between preparation, drive-time, and the presentations, I easily gave 120-150 hours (3-4 weeks of work). In short, teaching is something I love, it’s one of my core passions, and in 2015 I plan to take things to the next level.

Would you come along with me?

a recent class at SAR

I will still come to real estate offices and speak at many meetings for free, so please keep inviting me. But the change this next year will come in being intentional about doing more trainings for hire so I can really give myself more readily. Over the past couple of years I’ve noticed hour-long trainings are good, but they only scrape the surface. When we can get 2-3 hours together, it can much more meaningful.

Trainings in 2015:

How to Choose Comps & Make Adjustments: This training will give a framework for how to more effectively approach properties like an appraiser. The way appraisers and agents undertake valuing properties is dramatically different at times (even for experienced agents), so this class can be a game-changer. We’ll talk through choosing comps, how price per sq ft fits into valuations (and some of the big errors that can occur), and going through multiple practical scenarios together in MLS to value the largest lot in the neighborhood, the 1-bedroom house, the fixer, a location on a busy street, a house with a converted garage, etc….. We’ll look at how adjustments are made in appraisal reports too. The goal is to help agents begin to see properties like an appraiser does, as well as more effectively communicate about properties with appraisers. This class is meant for a group of at least 10, and is ideal for real estate offices or trainings hosted by loan officers or title companies.

Cost: $25 per person (or we can negotiate a flat fee)
Size: 10-50
Length: 3 hours

How to Communicate Effectively with Appraisers: What can you say and not say to appraisers? What is the best way to share “comps”? How can you build your case for the value of your listing without pressuring the appraiser to “hit the number”? How do you challenge a low appraisal? In this class we’ll walk through some very practical tips for how to talk to appraisers before, during, and after the inspection. Many times the real estate community puts very little emphasis on talking with appraisers. There is sometimes a hands-off approach when working with appraisers, but the most important thing you can do as a real estate agent is to have a focused and intentional system built into your business for communicating with appraisers. This is good for both new and experienced agents.

Cost: $20 per person (or we can negotiate a flat fee)
Size: 10-unlimited
Length: 2 hours (or shorter if need be)

How to Make Graphs with MLS Data: Real estate is changing, and it is becoming profoundly more visual. This means showing a neighborhood market visually on a graph can be a very powerful tool to use with clients. Yes, we have access to zip code graphs for free in MLS, but I’m talking about knowing how to make graphs for very specific neighborhoods so you can show what values are doing for specific properties. Not only can graphs like this help you show your market expertise, but they are great for listing presentations and blog posts. Honestly, learning how to graph has dramatically changed my business and the way I approach real estate. I hope the same for you, so I’d like to sit down to share my expertise with individuals for a two-hour period to work on making a few different types of graphs. I want to teach you how to do it using Excel so you can continue doing it after the class. We can even make graphs for neighborhoods you are currently working in so you have immediate marketing tools. The cost is a bit higher for this class since the training is incredibly valuable and hands-on. This is for agents and appraisers.

Cost: $100
Size: 1 person only
Length: 2 hours

a recent class at SAR II

Other Classes: I can also do classes on real estate blogging and other topics tailored to your office or group, but for now I wanted to highlight the three classes I’m most excited about. Please note prices can change too.

How you can help me:

  1. Set up a training date in your real estate office.
  2. Refer me to speak at a local or national real estate seminar.
  3. I would like to find some title companies to partner with to promote trainings in the region.
  4. Offer meeting space in your office.
  5. Keep inviting me to your office to give market updates or do Q&As (for free).

Thanks so much for your support. I really appreciate it.

Question: What are you looking forward to about next year?

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Our brown grass signs hit the TV screens

My lawn is dead, and now it’s been on TV. I mentioned a few weeks ago how I have been helping my kids make and sell signs to promote water conservation (we have a very severe drought in California). Anyway, Good Day Sacramento showed up to our brown parcel to do a story last week, and Fox 40 and CBS also did a piece recently too. Someone in Texas reached out to me to let me know the CBS story aired there too. Pretty wild, right? This was fun, so I definitely wanted to share. You can watch below and smile with me about our little signs making it to the tube.

Good Day Sacramento story (watch below or here):

The Foreclosure Look or The Conservation Look? I know brown grass isn’t really sexy, and my lawn looks like I’m going through a foreclosure. But the clincher for me to stop watering was driving by Lake Shasta two months ago. My jaw literally dropped after seeing how profoundly low the lake was. Yes, my ego does take a hit because my lawn isn’t perfect, but in this case conservation trumps image for me. In light of the severity of the drought I’ve simply had to redefine what brown grass represents. Instead of thinking of it as ugly “foreclosure lawn”, it’s instead the look of conservation and civic pride as a Californian. I don’t know about you, but when I see images like the one below, I’m alarmed and motivated to act.

lake-shasta-drought-03Feb2014

CBS Story (watch below or here):

Fox 40 Story (watch below or here):

brown-grass-is-sexy-sign

The Big Point: Whether you like the sign or not, or agree with my decision to “go brown”, I hope you’re encouraged to do all you can to save water inside and outside your home. Please know I’m not judging how others use water either.

Thanks for watching today. This project has been a blast for my family.

Question: What do you think are the best ways to save water for a household?

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