Discover What Buyers Will Pay in Today’s Market
It’s easy to look up how much money you have in your savings account or the real-time value of your stock investments. But determining the dollar value of a condo or house is trickier.
As a seller, knowing your home’s worth helps you price it correctly when you put it up for sale. If you price it too high, it may sit on the market. But price it too low and you may be losing out on a good chunk of money (nobody wants that!).
For buyers, it’s important to know a home’s worth before you make an offer. You want your offer to be competitive, but you don’t want to overpay for the property.
Even if you’re not a buyer or seller right now, as a current homeowner you might just be curious about the value of your home. Keeping track of your home’s worth year-over-year helps you understand the trends in your market. So, when you are ready to sell, you can take advantage of a good window of opportunity.
The good news is, a trained real estate agent—who understands the nuances of your particular neighbourhood—can determine the true market value of your property … and at no cost to you!
THE THREE TYPES OF HOME VALUES
When you start the process of buying or selling a home, you’ll frequently hear the words appraised value, assessed value, and true market value. It’s important to know the difference between each one so you can make better, informed decisions.
A professional appraiser is in charge of determining the appraised value of a home. These appraisals are typically required by a lender when a buyer is financing the property. And while the lender is the one requiring this information, the appraiser does not work for the lender. Your appraiser should be an objective, licensed professional who doesn’t have allegiance to the buyer, seller, or lender—no matter who is paying their fee.
The number the appraiser comes up with (the appraised value) assures the lender that the buyer is not overpaying for the property. For example, imagine a seller lists a home for $700,000. They reach a deal with the buyer to sell the home for $675,000. However, if an appraiser evaluates the property and determines that the appraised value is actually $625,000, then the lender will not lend for an amount higher than that appraised value of $625,000.
When figuring out this number, an appraiser will compare the property to similar houses in your neighbourhood or condo suites in your particular building, and they’ll evaluate factors such as location, square footage, appliances, upgrades, improvements, and the overall condition of the home.
The assessed value of a home is determined by MPAC, our municipal property assessor. This value matters when your city calculates property taxes each year. The lower your assessed value, the less property tax you’ll pay.
To come up with this value, your assessor will evaluate what comparable houses in the neighbourhood or condo suites in your building have sold for, the size of your home, age, overall condition, and any improvements or upgrades that have been made. However, most assessors don’t have full access to your home, so their information is limited.
Assessments are made annually to determine how much property tax you owe. For us in Toronto, they typically project those value estimates out several years in advance.
If your assessed value isn’t as high as you envisioned, don’t sweat it… you’ll be paying less realty taxes each year.
Many homeowners appeal their assessment in favor of a lower valuation if they feel their valuation is too high, but that’s not too common in the GTA.
True Market Value
True market value is established by your real estate agent. It basically refers to the value that a buyer is willing to pay for the property. A good real estate agent is an expert in determining true market value because they have hands-on experience buying and selling properties. They understand the mindsets of buyers in your market and know what they’ll pay for a desirable house, townhouse, or condo.
This is the MOST important valuation when deciding to put your condo suite or house on the market.
As a seller, knowing your true market value is important because it helps you choose how much to list your property for. It can also help you decide if you want to make any improvements to your home before putting it on the market.
I can help you figure out which updates and upgrades will have the biggest impact on your true market value… check out RoomByRoomReview.com for details.
WHAT’S THE DEAL WITH ONLINE CALCULATORS?
When figuring out your home’s value, you might be tempted to see what some real estate sites like Zillow, Redfin, and others have to say. When you use an online calculator to determine your home’s value on these sites, it is just an estimate. It’s not an actual appraisal or the “true market value.”
Having an agent involved in this process is essential because they understand the market better than a computer ever could. They’re showing property in the GTA every single day, and they know the particular preferences of buyers and sellers in the area.
Young professionals, large families, empty nesters, and other groups are all looking for different things in a home. A local agent has most likely worked with all of them, so they understand what every segment in your market is specifically looking for.
HOW AN AGENT FINDS YOUR HOME’S TRUE MARKET VALUE
So, how does an actual real estate agent determine true market value? They’ll start by doing a comparative market analysis (CMA). This means they’ll compare your home’s features to similar properties in your area. For the CMA, the agent looks at the below factors to influence their assessment of your home’s worth:6
- Neighbourhood sales - Your agent will look at similar, recently sold homes in your neighbourhood or specific condo building to see what they sold for and what they have in common with your house or condo.
- The exterior - What does your home look like from the outside? Your agent will factor in curb appeal, the style of the house, the front and backyard, and anything else that impacts how the house looks to everyone walking and driving by.
- The interior - This is everything inside the walls of the home. Square footage, number of bedrooms and bathrooms, appliances, and more all influence the overall market value.
- Age of the home - Whether you have a newer or older house or condo suite affects the number your agent comes up with as part of their assessment.
- Style of the home - The style of your home is important because buyers in different markets have different tastes. If buyers prefer a 3-bedroom bungalow and you have one, then your home may sell for a premium (aka more money!). Perhaps buyers want a 2-bedroom suite but require that the bedrooms are on opposite sides of the unit for privacy purposes.
- Market trends - Because a local agent has so much experience in your market, they have their finger on the pulse of your area’s trends and know what buyers are willing to pay for a property like yours. Read my monthly email newsletter to keep up with market trends!
- Location, location, location - This one’s probably the most obvious. Your agent will think about how popular the area is, how safe it is, and what schools or other neighbourhood amenities are like.
A computer algorithm simply can’t take all of these factors into account when calculating the value of your home. The reality is, nothing beats the accuracy of a real estate agent or professional appraiser when it comes to determining a home’s true market value.
YOUR AGENT IS THERE EVERY STEP OF THE WAY
Determining a home’s true market value is a real estate agent’s forte. If you’re a seller, your agent will help you find your home’s market value so you can list it at the right price.
For buyers, your agent will help you determine the value so you can come up with a fair offer. Your agent can also set up a personalized home search on the Multiple Listing Service (MLS) for you so you’ll receive emails of listings that meet your criteria. This will help you see what’s out there in your city and how properties are being priced.
If you’re thinking of selling, give us a call! We’d love to help you position your home to sell in our market.
Get a Complimentary Report With Your Home’s True Market Value
Curious about what your condo or house might be worth in today’s changing market?
For a condo valuation, go to DowntownTorontoCondoValues.com - please be sure to leave me your condo’s monthly maintenance fee.
For a specific house valuation, click on DowntownTorontoHouseValues.com.
To keep current on market activity changes and analysis during the month, go to Facebook and ‘Like’ my Toronto Real Estate Analysis page.
Want to learn more about how to stage your condo or house to sell?
If you're a condo owner, click HERE to download a free copy of my book
Insider Tips for Getting The Best Price
The Complete Guide To Selling Your Toronto Condo
If you're a house owner, click HERE to download a free copy of my book
Insider Advice For House Sellers
The Complete Guide To Quickly Selling Your Lovely House
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If you are going to sell your suite in the next 1 to 9 months, what you do right now can make a difference of thousands of dollars in your sale price, and there are some simple things you can do forthwith to make sure you get "Top-Dollar" when you do sell.
HERE ARE 3 FREE SERVICES YOU MAY WANT TO TAKE ADVANTAGE OF RIGHT NOW
First, is our FREE "Pin-Point Price" Analysis, where I can take a closer in-person look at your condo and prepare a very specific price for your suite. This price will be much more precise than the general range that you can get automatically from the site - and we guarantee in writing to sell your condo at the "Pin-Point Price" or higher in less than 32-days.
Second, is our FREE "Room-By-Room Review", where I do a 20-minute walk-thru and make specific recommendations about which fix-ups or improvements you should (and should not) do to prepare your suite for sale. I will point out the lowest cost, highest return improvements you can make to help sell your condominium quickly and for more money.
Third, if you would like, I will include your condo in our "Silent Market" of condominiums that are not yet on the market. Because we generate so much buyer interest from our website, Facebook and Google advertising and other proactive marketing, we may be able to find a buyer for your condo without even putting it on the market… saving you both time and money.
These 3 services are FREE. The Room-By-Room Review takes about an 20 minutes, and we can arrange a time during the day or evening, whenever is most convenient for you.