Knowing Your Home’s Value
When evaluating your home’s value the one thing to know is that it is NOT based on the how much you need to buy your next place. And it’s certainly not based on what a Buyer can afford (yeah, we see this type offer, normally with a nice photo and letter attached to the offer.) It is based on the merits of your property as compared to other “comparable” homes in the area and true Market Value – what someone is willing to pay for your home at a particular point in time, without unusual forces such as under duress to buy, etc. Factors such as season, desirability of an area (even just a section of a street) can and will come into play. And more What are comparable homes? We create a list of homes using many criteria, adding and subtracting value for the criteria that is there or not there so that we are comparing apples to apples.
We start by mapping out an area that your property is located in, and then go further by adding in homes of similar square footage, age, lot size, style (bungalow vs two storey, etc), townhouse, detached and so on. But there are still so many differences, right!?
When we look at comparable listings we look at number of bedrooms but we also look at rooms and room sizes and, very importantly, the level the rooms are on! For example, is that fourth bedroom on the second level or is it in the attic or in the basement? Is the two-piece bathroom on the main floor or in the basement?
Also considered is the number of “living spaces” there are. Does it measure up to number of bedrooms. Two bedrooms with three living spaces doesn’t make more sense that three bedrooms with one living space. All of this will affect price.
A very well finished, dry basement adds living space and the possibility of income. This adds value. But for some the added value is not in added income but having extra living space on the main level. So we question “Is it an area where there are people looking to even rent the basement?”
Depending on general location (downtown Hamilton vs Ancaster) parking can mean a massive price difference. Parking within comparable properties in Durand, Kirkendall, Strathcona etc can make all the difference to many buyers.
When we have a good idea of which properties are comparable we then add and take away value because no two homes are alike unless you are buying neighbouring new builds. We add value for new windows, furnace, air conditioning (which doesn’t seem to be too much if we are working with a forced air system, but can skyrocket into the tens of thousands if we’re working on a hot water radiant heat system), new and updated bathrooms, kitchen, flooring, basement and attic loft finishing. Paint colours! (Personal paint colours can keep people away!) Value can also come from the curb appeal or lack of so that is taken into account.
What’s the actual layout like? New kitchen but in a very small space vs new kitchen that has been attractively opened up. Two homes, same square footage, brand new kitchen… next door to each other, why did one sell for so much more… aha! The Opened-Up kitchen. Important to know.
The overall appeal on the internet is also a factor. Did the agent take every effort to make their Sellers’ property look it’s best through:
– Fresh Paint
– Great Curb Appeal
– Was it well priced from the “get-go” or did it languish due to bad pricing (often selling for
below it actually should have).
We also look at area particulars that affect the property (or the comparable). Is it on a busy corner? Is it in the shadow of an apartment building? Is the next door neighbour a messy renter who has no lawn cutting plan with the landlord? Is it the nicest home on a less than average street making local comparable properties not that comparable? We consider it all. If it was slow to sell due to an immediate area influence, we can normally assume that it will historically always sell a little slower for the same reason.
We have to make adjustments as well for homes that have been over-improved, even if it your home. If you’ve installed the best of the best in your home but no one is going to want to pay for your gold-plated bath faucet, that may be hard to swallow, but it must be taken into
account. Buyers will pay for an updated home but they won’t pay for your renos. Hmmm We do not show up and give a potential client a price before having seen it and doing additional homework (beyond what we did before even visiting the property).
When we return we sit with homeowners and go through the comparable properties. And not just the address and the image of the house but right inside, photo by photo, looking with great detail at every room, letting the sellers get a good feel for what is selling for what. We discuss with homeowners what is currently listing for what (maybe it’s the very beginning of the spring market and no one has listed yet!), sometimes deciding to wait to see what market is going to do.
We discuss the general price for an area, who is looking to buy there, why, and what that Buyer is looking for. Down sizers, first-time buyers? Is Toronto calling in this particular area? We need to consider what the immediate market was when the comparable property sold. Did it sell in competition, did it languish on the market? Were homes selling around it when it was not selling? Why?
Just adding up the sales and dividing by that number of homes will give you a nice average but an “average” price doesn’t always work. Appraisers will tell you that. There can be “outliers” that sold for a crazy high price or a crazy low price. They’re usually not reflective of what’s truly going on and usually do not bring with them factors that will affect your property pricing. (Maybe the one that sold for an unusually higher than expected price did so because they were moving next door to mom who was going to provide day care for the grandchildren.
Maybe the house that sold for a very low price did so privately to a “flipper” who will bring it back on at a much higher price.) We check prices of all area homes, and not just what we see on the MLS; we check the registry for all local sales as well so we really know what’s going on.
Material Facts – If all the steel industry and spinoffs shut down in Hamilton, it would greatly affect the real estate values. Massive economic downturns, high interest rates, war… all of these affect everyone, everything, and your home value as well. News on massive condo towers being built behind a property can definitely affect what people will pay within that period of the unknown. People can pay more on news of a positive (like an LRT) if they thought it would get them into a home for less and a faster commute. Of course, buying or not buying on speculation can cost the Buyer. It’s a gamble. But those numbers do come into play and we will tell you if there are numbers like those that affect our comparables.
Just the facts! We will be completely straight up with you. We back our pricing with good market analysis, and smart pricing strategies paired with the best marketing strategies for your property. We are proud of never coming to a potential Seller with a seductive listing price just to get the listing. That is just simply not our style. We don’t use fine print, gimmicks or make empty promises… We price it, we work hand in hand helping Sellers get their home market-ready and it’s very best (kinda like a wedding day!) and we launch it! SOLD!