I previewed this house in Northwood Hills with buyers on Saturday morning and had to share the story of the "two kitchens". I absolutely love outdoor entertaining areas but I thought this example could serve as a cautionary tale to home owners who are wondering where to spend their money in upgrades. I'm all for investing in the exterior but there's an order to the checks you should write.
While this listing was clean and "livable" inside, it was very clear that the vast majority of updates had been done to the exterior. The challenge with starting outside is that ... well ... you don't live outside! Buyers appreciate outdoor upgrades but it's much easier to compromise on a yard that hasn't been decked out versus a kitchen inside that's stuck in a time warp.
Exterior enhancements can make a difference in whether or not a buyer moves forward on a property but that doesn't necessarily translate to them being willing to pay more. A nice kitchen or master bath, however, does. When considering upgrades to a home, sellers need to look at the project from two angles. Is this upgrade a lifestyle choice that will enhance the owner's enjoyment of their home, regardless of whether they see a penny in return, or is the upgrade something that will add value to the property on resale?
There's not really a wrong answer but the problem typically presents itself when the homeowner goes to sell. Invariably, the seller starts doing the mental calculus on where they spent money over the years and that's how some people try to arrive at a list price. Not where the value is for a new buyer, but how the receipts tally up over the years. That's the mistake.
If you're driven by owning a home as an investment strategy, interior upgrades to kitchens, baths and an open floor plan are the strongest way to build value with a higher sales price. Exterior upgrades are important, and should not be overlooked, but I've never seen a buyer willing to pay an extra $50,000 because the plants out front were "top of the line".