Undoubtedly, one of, the most important considerations when deciding to sell your home, is its’ value! Home-owners want to know the market value, assessed value and the appraised value.
Some questions a home-owner may want to know and these are all relevant questions are:
- Has my equity increased?
- Has the neighborhood’s value increased?
- Is my valuation, in line with industry professionals?
- How much is my home worth?
Ultimately the market value of your home is whatever someone is willing to pay you for it. An appraisal value is a value determined by the study of comparable properties and local market conditions. It is, in reality, an educated guess about what the market value may be. The assessed value of homes in Ontario is done by MPAC and is a (CVA) Current Value Assessment which is a common standard used for property assessment jurisdictions in North America. MPAC uses 3-5 years of open-market sales in the area to determine the current assessed value of surrounding properties. Assessed values often come in at a lower evaluation than market value or an appraised value. It is almost as if MPAC is a year or two behind in their evaluations.
Here are the steps I take to appraise the value of a home. Hopefully, this will give you an insight into a process that sometimes seems clouded in inconsistencies.
I will break it down into sections; the first section is the background information. All of this research is now completed online. By completing this study it gives me a solid base, for when I actually visit the property in person.
Note:This background information is gathered from Ontario’s Electronic Land Registration System, known as Geowarehouse and my local realtor resource site, known as Filogix (this is the Realtor version of Realtor.ca). These sites, will not only allow me to look up the comparable properties and sales history, but will also allow me to find more details on the home and neighbourhood.
History of the Home: I will check to see who owns the home and the history of sales. I am also looking for more details that will lead me to a value, such as, old pictures, previous descriptions, notes on any upgrades and updates.
History of the Neighbourhood: I will generally have a look for homes that have sold in the last year. These homes should obviously be located within the same neighbourhood or geographic area. This will give me a general “ballpark idea” of the value of homes in any given neighbourhood Keeping the comparison search relevant is a must. For instance, a 5 bedroom, 2 storey home won’t help me evaluate a 2 bedroom ranch. I am also looking for expired and cancelled listings. These listings will let me know if homes are being overpriced in the area.
Current Neighbourhood Activity: Checking the currently active listings in a neighbourhood is like scouting your opponents. These are the homes that you are going to be competing against if you decide to sell. If there is an open house, make sure you check it out. You need to have this current information to make an accurate evaluation of a property. Along with the information I gather when researching the “History of the Neighborhood”, I am trying to compile all relevant information to justify my pricing and to make sure that I am inline with market conditions.
This completes the background stage; the next stage is to actually visit the property and those around it.
Visiting the Property: When I go to visit a property, I am not only trying to establish the value, I am looking for anything noticeable that may need to be changed. I am thinking about useful tips for the home owners in preparation for listing. I am considering the current condition of the house and how that may change the valuation. I will ask about updates/renovations, upgrades and things that may be excluded (chandeliers etc.).
Visiting Competing Properties: I will try and visit any available open houses for comparable properties, or I will request an appointment to go and visit other homes listed in the neighbourhood. When I am doing this for research purposes, I always let the agent know what I am doing. This way their client knows as well.
Talking with Potential Sellers
The final stage is the conversation with the potential sellers. At this meeting, which usually happens after touring their home, I come prepared with print outs of everything I have researched.
This should include:
- Comparable homes currently available
- Comparable recently sold homes (normally within the last year, perhaps longer if only a few homes have sold in the area)
- Comparable expired and cancelled home listings
- Similar homes currently available (may have some of the same characteristics, but also some big differences e.g. finished basements, swimming pools, extensions, etc.)
- Similar Homes Recently Sold(normally within the last year, perhaps longer if only a few homes have sold in the area)
We will look at all this information. I will let them know my observations from visiting other homes. I will give my HONEST impression of their home and the neighbourhood. Based on all of this information I will give them my idea of a listing price. I will normally try and give a range of pricing (for example $274,900 to $279,900). After I have given my evaluation, I should then be able to justify it to the home sellers.
A few other points worth noting in regards to listing your home…..
Price Fixing IS NOT ALLOWED! There is no common place commission %. A number of Realtors may charge the same amount, but that is always negotiable.
We work for you. Do not let yourself be bullied into listing at a lower price. We often list homes a little higher than we recommend. We do this with the full understanding of all parties involved that this isn’t what we suggested. We still try and sell the home to the best of our abilities, and after we have given it a shot, we may look at bringing the price in line with what we recommended. I hope you understand a bit more about the value of your home.
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