One of the things I get asked frequently by potential sellers here in Davis County is “Do you think I need to….” followed by a litany of various home improvement project options. In a declining price market as we currently experience, many sellers are reticent about “putting more money” into the property when the likely return on investment isn’t there. However, this can often be a mistake. The key point to evaluate isn’t so much how much “more” will the sales price be after the improvement but rather, how much “less” will I get if I don’t make the improvement.
In the current market where housing inventories are elevated (and in some price ranges exceptionally so), the key factor is how your home with or without the changes will compete with the existing inventory on the market. Many times existing homes are competing with unsold new construction properties. New construction generally has the advantage of newer floorplan designs, updated fixtures and appliances and newer construction materials (e.g. low-e windows, higher R-value insulation, etc); while existing homes have more mature landscaping and established neighborhoods. Most (not all) buyers like “new” compared to “old” (a pretty universal concept beyond housing) and so it generally comes down to which home provides the best value proposition.
Buyers are also notorious for significantly over estimating the cost to “fix” or “update” something. As a result, if there are items a typical buyer would want to “change” in your house, they will nearly always over estimate the cost of the project, many times by double the actual cost. That figure will be in their minds when they develop an offer for the home.
While most homeowners should make changes to their houses that suit their lifestyle rather than the eventual sale price of their home five, ten, or even twenty years down the road, there are a few things to keep in mind. After all, if you plan to sell your home at some point in the future, you want to be sure you’re maximizing your return.
Repair all the little things – now Most of the time, homeowners are willing to overlook the little idiosyncrasies like a broken step on the porch or chipping paint on the kitchen cabinets while they live in their house. Deferred maintenance items are not only a subtle 
irritation while you own the home, some items can lead to larger issues down the road if left unattended (e.g. a missing shingle on the roof, a crack in the patio that isn’t sealed, chimneys that aren’t cleaned regularly, etc). However, for someone buying a home, these things can become just the reason they need to take your home off their list and move on the next (did I mention there is quite a bit of inventory on the market right now?). By fixing issues as they arise (rather than waiting until you’re ready to sell your home), you not only avoid making numerous repairs all at once, but you actually get to enjoy the repairs while you live there and hopefully avoid major repairs due to unattended issues.
Know your neighborhood - This is a critical issue often overlooked by homeowners. “Typical” housing inventory can and does vary significantly from one neighborhood to another. While you don’t have to tailor every change to your eventual sales audience, you should plan to make the types of changes that are consistent with properties in your neighborhood (and your potential competition) when you decide to put your home on the market. Don’t fall into the trap of “over-improving” your home relative to 
your neighbors unless you really, really need to have that 3,000 square foot gazebo that takes up your entire backyard in your neighborhood made up of 8,000 square foot lots. While at the same time, it is important not to defer certain home improvement projects for older homes (e.g. roof, landscaping updates, new windows, modern flooring, etc), if many of the homes in your neighborhood have completed major renovations recently. Most homes will appear “outdated” to buyers if they are 15-20 years old without major updates to keep them current. If you want to get an idea of the “current” trends, swing by new construction models. They are one of the best leading indicators of design and materials that buyers are considering.
Don’t ignore the less visible changes - Almost all houses for sale go through cosmetic changes before they hit the market. Fresh paint, new carpet, and landscaping cleanups are common. Less common are things like a new roof, updated plumbing, new HVAC systems or even a newly-installed automatic sprinkler system. However, these things show up in a home inspection evaluation and will always get the focus and attention from buyers during their due diligence process. In a market like the current one, for example, if you have a furnace that is more than 20 years old, a buyer will find out and will likely come back after their inspection looking to get “price relief” knowing they will be looking at a replacement in their first five years or so of owning the home (actually the buyer will assume the furnace will go out one day after the home warranty expires).
All that said, the most important thing you can do is make the updates or improvements that will bring you the most enjoyment while in the home (as that may end up being the best return on investment you can receive). However, by keeping its eventual sale in the back of your mind, you’ll be able to gauge just how much to spend on those updates – there’s nothing wrong with a 500 square foot gazebo!!
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