5 things to know before you tackle an expensive backyard makeover
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With the weather warming up, many a homeowner’s mind turns to sprucing up the exterior, all the better to spend time outdoors. In fact, according to HomeLight’s “Buyer and Seller Insights for End of Year 2022,” a desire to have “my own yard/outdoor space” was the number one motive stated for buying a home (especially among Gen X and Millennial buyers), and 29 percent of those surveyed had already completed an outdoor landscaping project on their current home. Plus, 39 percent of homeowners plan to renovate their outdoor space in the next five years.
Of the many such projects homeowners are undertaking this year, landscaping and fencing are among the most popular, according to Angi’s annual “The State of Home Spending in 2022” report. “In general, landscaping projects always have a high ROI since they can increase curb appeal and the overall feel of the space,” says Mallory Micetich, a home expert at Angi.
Renovating your outdoor space can add a lot of value — not to mention enjoyment — to your home, but it can also be costly. While it’s easy to go overboard, especially in these inflationary times, bigger isn’t always better. Here are five key things to consider before you tackle an expensive backyard project. A little planning and research can go a long way in helping you get a good ROI on your backyard renovation.
Here’s where popular outdoor projects fall in terms of average costs, according to Angi:
|Pool||$36,000 (if built from scratch), ranging from $700 to $125,000|
|In-ground||$60,350, with most homeowners spending $41,750 to $80,000|
|Above-ground||$3,350, with most homeowners spending $700 to $5,000|
|Deck||$7,887, ranging from $4,126 to $11,648|
|Patio||$3,760, ranging from $1,937 to $5,641|
|Landscaping and gardens||$3,455, ranging from $225 to $13,000|
|Fencing||$3,056, ranging from $400 to $10,000|
What to consider before doing a backyard renovation
In general, “you might see a higher ROI on front yard projects since they will be the first thing potential buyers see, but having your backyard match the front keeps the ROI value high,” explains Micetich. Here are some other guidelines to keep in mind before undertaking an outdoor renovation project.
1. Simple lawn maintenance can go a long way
Want to get the best value for your dollar? Start with basic landscaping. “Making sure your lawn is healthy and your flower beds are neat and tidy with edging and fresh mulch are easy ways to make your yard look its best without breaking the bank,” says Lisa Schaumann Stryker, VP, marketing & communications, National Association of Landscape Professionals. Other simple, cost-effective updates include trimming overgrown hedges, clearing away brush and dead plants, repairing sprinkler heads and making sure that everything looks fresh and new.
According to HomeLight agent reports, basic yard care (with fresh mulch) can add nearly $4,500 in resale value, or a 539 percent ROI, says Caroline Feeney, executive editor, HomeLight. Basic yard maintenance is also one of the most frequently recommended outdoor projects recommended by Realtors prior to a home sale, according to the National Association of Realtors (NAR)’ “2023 Remodeling Impact Report: Outdoor Features” report. The least expensive project cited in the survey — standard lawn care service — had the highest cost recovery (217 percent), followed by landscape maintenance (104 percent).
2. Appraisers judge condition — not how expensive the materials are
If you plan to sell your home in the near future, fancy updates might end up costing you money you won’t recoup. Before you splurge on the most expensive materials, think about how much return you want on your investment, says Ran William, real estate inspector and owner of OR Valuation Services.
Home appraisers look at what shape your home is in when they evaluate it, not necessarily the materials. A new pool with expensive glass tile will add the same amount of value as a new pool with porcelain tile. What matters is whether there are chips, cracks and overall wear and tear. People who put in quartz countertops — a premium material that can cost up to 40 percent more than granite, for example — are probably not going to get their money back, William says.
“If you put in a brick patio rather than concrete, I’m not going to give you more credit for brick, even though it’s much more expensive — it’s the condition I’m judging,” William says.
Make sure you price compare materials so you get the most mileage out of every dollar you put into your outdoor projects. From an investment viewpoint, the pricier product is only worth it if it lasts longer or requires less repair.
3. Be aware of what are the neighbors doing
Comps play an important part in how homes are valued, and sometimes you have to do what everyone else is doing if you want to eventually sell your home. Homeowners might have to invest in certain upgrades to meet neighborhood norms; otherwise the property will get devalued.
“Let’s say the cost of the pool is $68,000 with hardscape. Although this is a lot of money, in high-end neighborhoods where everyone has a pool, the property will sell for much less because it doesn’t have one,” William says. “Sometimes it’s not just the cost of the improvement, but it should be on par with what your neighbors have.”
But while you should keep up with the Joneses, you don’t necessarily have to surpass them, going overboard with the most expensive materials (and features), Feeney notes. “There’s a high chance that extravagant updates end up costing more money and don’t provide the best return on investment,” she says. “It all depends on your local market and what buyers in your area are searching for in their next home. I always recommend consulting with a local real estate agent to see what’s likely to appeal to buyers in the area.”
4. Think about your lifestyle
Homeowners should think about the big picture in deciding how they want to use their yard, counsels Schaumann Stryker. “They can plan different areas for different things.” Think: grassy areas on which kids and dogs can play, a space for entertaining, an outdoor home office, and shaded or screened zones with plantings for privacy. All these are possibilities.
“Adding a deck or patio is a core function of outdoor living spaces and should be the first consideration when adding to your outdoor space,” she says. While not every homebuyer will want a pool, such multi-use features are always useful, she adds. Landscaping pros have seen an uptick in demand for new patios in particular, the NAR outdoor remodeling report notes.
5. Consider different financing options
Although some outdoor projects can be DIY ventures, bigger jobs might require financing. For homeowners who’ve built up a strong stake in their property, a home equity loan or a home equity line of credit (HELOC) are two low-cost options that might fit their needs. Equity-based loans are cheaper than credit cards, which have an average interest rate around 20.04 percent (as of March 8, 2023). Meanwhile, home equity loan rates average 7.86 percent and HELOCs average 7.75 percent. These loans are often less expensive than personal loans, as well. According to Feeney, 38 percent of HomeLIght’s agents predict homeowners will use their home equity to finance renovations in 2023.
“Many people are not familiar with home equity lending,” says Jon Giles, head of consumer direct lending at TD Bank. “While rates have increased, home equity remains one of the most affordable ways to borrow money. Your average home remodel is about $45,000, so this is where a home equity loan or HELOC can help.”
The benefit of a HELOC for home improvement projects is that you only owe what you use, which is beneficial if you aren’t sure how much the final amount for a project will be. Equity-based loans are also tax-deductible if you use them for home improvement projects (and you itemize deductions).
When you apply for a home equity loan or HELOC, banks look at three main things, explains Giles:
- the loan-to-value (LTV) ratio on the home
- the applicant(s) credit score
- the applicant(s) ability-to-repay or debt-to-income (DTI) ratio
Remember, though, this is additional debt. For people who are struggling to make their mortgage payments, taking on home equity loans can be risky. Because they use your house as collateral, you can end up losing it if you fail to make payments.
Popular backyard ideas
Here’s a quick look at trending backyard renovations:
- Pool: “Pools are a great way to make your backyard a dream oasis, but not every buyer is going to want the liability or expense that comes with maintaining a pool,” says Feeney. “In the end, it depends on your market and what local buyers are prioritizing in their home search.” Expect a $21,483 value-add at resale or 51 percent ROI, according to HomeLight.
- Landscaping: Fresh landscaping with features, such as a new walkway, flower bed, and shrubs, adds an estimated $6,235 in resale value for a 39 percent ROI, says Feeney.
- Deck: Decks offer an ROI of up to 66 percent, says Micetich. Generally, they’re now worth 65 percent more than they used to be, says Feeney. Post-pandemic, a deck adds an average $7,014 to a home, compared to the $4,252 agents estimate a deck was worth prior to COVID-19, she adds.
- Fencing: “Privacy is a huge want for many prospective buyers and a beautifully built fence can add up to a 70 percent ROI,” says Micetich. On average, you can expect to pay $13 to $23 per linear foot (including materials and installation), adds Feeney.
- Patio: Top agents estimated that a new patio costing $3,269 to build would result in a $3,563 increase in value or a 109 percent ROI, according to Feeney.
- Fire Pit: This feature is the number one outdoor upgrade homebuyers wanted to see in 2021, according to 54 percent of agents HomeLight surveyed — and two years later, those pits are still on fire. Although costs range widely based on type, HomeLight’s research indicates homeowners recoup 84 percent of fire pit costs at resale.
- Outdoor Kitchen: Going way beyond the basic barbecue, 46 percent of agents say homebuyers want to see an outdoor kitchen — a set-up that includes a grill, sink and fridge, says Feeney. A $14,000 outdoor kitchen can recoup about 71 percent at resale, a $57,000 version will recoup about 55 percent of that amount.