Stacie Thompson

Office 416-322-8000 | stacie@bosleyrealestate.com

What’s Your Home Actually Worth? 
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 home 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 neighborhood—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. 


Appraised Value


The appraised value is the term most often used by the potential Bank that will be providing the financing on the property. They want to determine if the property is worth enough to cover the mortgage they will be issuing. A professional appraiser is hired by the bank to visit the property and provides their opinion of the value. The appraisal fee may be charged to the borrower, but they do not get a copy of the report.[i]


The appraiser either does a “drive-by” or visits and does a walk-through of the property.  They then look at comparable properties to determine a price.  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 $899,000. They reach a deal with the buyer to sell the home for $1,100,000. However, if an appraiser evaluates the property and determines it to be less than a problem arises with financing. 

 

Assessed Value


The assessed value is used by the municipality property assessor for property tax purposes. The Municipality Property Assessment Corp a.k.a. MPAC oversees the assessments in Ontario. This value matters when the City calculates your property taxes each year. The lower your assessed value, the less property tax you’ll pay.


To come up with this value, MPAC compares the area sales in the area along with approximately 200 different factors.[ii]  These factors include the size of your home, age, overall condition, number of bedrooms/bathrooms, and any improvements or upgrades that have been made. However, when making this assessment MPAC doesn’t have full access to your home, so their information is limited. MPAC provides your property’s assessment information to your municipality/local taxing authority. The assessed value and classification of your property is used as the basis for calculating your property taxes. 


Under the phase-in provision in the Assessment Act, an increase in assessed value is introduced gradually over four years. A decrease in assessed value is introduced immediately.4


If your assessed value isn’t as high as you envisioned, don’t sweat it. Many homeowners appeal their assessment in favor of a lower valuation so that they can save money on property taxes. If you’re interested in appealing your property tax assessment, let us know. We offer complimentary assistance and would be happy to help you build your case.


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.


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. Your agent can help you figure out which updates and upgrades will have the biggest impact on your true market value.


 

WHAT’S THE DEAL WITH ONLINE CALCULATORS? 


When figuring out your home’s value, you might have seen the popular US based real estate sights like Zillow, Redfin, and Trulia. It is tempting to see what such services have to say, but remember, it is just an estimate. It’s not an actual appraisal or the “true market value.” These sites all have their own algorithms for coming up with their estimates. For example, Zillow comes up with their “Zestimates” by calculating “public and user-submitted data, taking into account special features, location, and market conditions.” [iii]


These online estimates can be a great starting point for opening up the conversation with your real estate agent about your home’s worth. But even Zillow recommends that you use a real estate agent for coming up with the actual market value of your home. The site says that once you get your “Zestimate,” you should still get “a comparative market analysis from a real estate agent.”


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 your city 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:[iv]


  • Neighborhood sales- Your agent will look at similar, recently sold homes in your neighborhood to see what they sold for and what they have in common with your house. 
  • 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 house. 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 home 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 ranch-style homes and you have one, then your home may sell for a premium (aka more money!). 
  • 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. 
  • 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 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, as an agent, I will help you find your home’s market value so you can list it at the right price. 


For buyers, as your buyer agent, I will help you determine the value so you can come up with a fair offer. I 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 area of interest and how properties are being priced. 


Get a Complimentary Report with Your Home’s True Market Value

Curious about your home’s true market value? Call us to request a free, no-obligation Comparative Market Analysis to find out exactly how much your home is worth!



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As we begin another year, everyone wants to know: “Where is the housing market headed in 2019?”


The Canadian real estate market experienced a cooldown in 2018 following years of rapid growth. This left many homeowners and potential buyers feeling skittish. Fortunately, economists expect the market to stabilize in 2019 and continue to appreciate at a more sustainable rate. To help guide you through this shifting landscape, we’ve summarized some of the expert predictions and key factors expected to shape the housing market in 2019 and beyond.


SALES LEVELS WILL STABILIZE


A combination of rising interest rates, provincial policy changes, and a newly-implemented “stress test” requirement for mortgages pushed sales activity to a five-year low in 2018. However, economists expect the impact to taper off over time due to positive economic fundamentals: a strong economy, low unemployment, rising incomes, and rapid population growth.


“Far from a sign of trouble, we view this cooling constitutes as a healthy correction that would prevent overheating conditions from re-emerging in parts of Canada such as the Vancouver
and Toronto areas. We expect a modest recovery to take shape in 2019,” noted the Royal Bank of Canada in its Canadian Housing Market Forecast. “We see little risk of a downward spiral because demand and supply conditions are balanced in the majority of local markets and expected to remain so over the forecast horizon.”1

 

What does it mean for you?If you’ve been scared off by reports of a market slowdown, it’s important to keep things in perspective. Policy changes were put in place to cool down an overheated market that had led to increased debt levels, decreased affordability, and historically-low inventory levels. A gradual and sustainable pace of growth is preferable for long-term economic stability.


What can you do right now to get your property ready for the spring market? Schedule a personal property review for free professional advise that will save you time and money and increase your sales appeal.

 

PRICES WILL HOLD STEADY


Economists expect prices to hold steady this year, rising slightly to keep pace with inflation. While the national average price declined by 4.2 percent in 2018, the Canadian Real Estate Association predicts it will rebound slightly this year by 1.7 percent.2  


The Canada Mortgage and Housing Corporation also expects prices to remain high, but stable. “By 2020, demand is expected to continue to shift towards relatively less expensive housing options such as apartment condominiums. This combined with slowing growth in economic conditions will lead to modest average price growth over the forecast horizon.”3


The Royal Bank of Canada agrees, cautioning that “would-be buyers hoping for a meaningful [price] break will likely be disappointed—we don’t expect aggregate prices to fall on an annual basis either this year or next.”1


What does it mean for you? If you’re a buyer waiting on the sidelines for prices to drop, you may want to reconsider. The current sales slowdown has made many sellers more willing to negotiate. Don’t miss out on the most favourable market we’ve seen for buyers in years.


Now may be the time to sit down and discuss a customized Buyer’s Plan that will give you the positive results you want to see in purchasing your next home.  Contact us to schedule a one-on-one time to plan.


NEW CONSTRUCTION WILL SLOW


The Canada Mortgage and Housing Corporation predicts new home construction will trend down over the next two years from a 10-year high in 2017. “Single-detached housing starts are anticipated to decrease over the forecast horizon. Construction of this housing type will continue to be limited by residential lot availability, but also by elevated price and borrowing costs in some major CMAs that represent an important portion of national starts.”3


However, economists expect the decline to be gradual. According to Fotios Raptis, a senior economist at TD Bank, “a steep downturn in homebuilding nationwide appears unlikely. Canada's population is on the rise, medium-term income growth should remain healthy, and most markets are generally not overbuilt.”4


What does it mean for you? Buyers will continue to have options in new construction, but the decreased rate of supply should help prop up the resale market, which is good news for sellers. We can help take the guess work out of what is right for you.  



INTEREST RATE HIKES WILL TAKE A BREATHER … FOR NOW

 

After a prolonged series of interest rate hikes, the Bank of Canada announced in December that it will likely slow its pace of rate increases. “We no longer expect the Bank of Canada to hike its policy interest rate in January. Spring 2019 now appears to be the more likely timing, allowing for the bank to ensure that the growth narrative is back on track,” commented Brian DePratto, a senior economist with TD Bank.5

 

At the same time, the impact of the mortgage stress test has slowed the pace of new mortgages being issued by traditional lenders. So even as funding costs have risen, banks have been hesitant to raise the 5-year qualifying rate. In its latest Mortgage Rate Forecast, the British Columbia Real Estate Association predicts that the 5-year mortgage rate will hold steady this year—and may even decline in the first quarter.6

 

What does it mean for you?If you currently have a variable rate mortgage, the bank’s revised policy should offer some welcome relief. And if you thought rising interest rates would prevent you from buying a home this year, you may be pleasantly surprised. The variety of financing options may allow you to buy, move up or downsize easier than you think. We can help you find the right solution.


 

WE’RE HERE TO GUIDE YOU


While national real estate numbers and predictions can provide a “big picture” outlook for the year, real estate is local. And as local market experts, we can guide you through the ins and outs of our market and the local issues that are likely to drive home sales and values in your particular neighbourhood.

 

If you have specific questions or would like more information about where we see real estate headed in our market, let us know! We’re here to help you navigate this changing real estate landscape.


START PREPARING TODAY


If you plan to BUY this year:

 

  1. Get pre-approved for a mortgage. If you plan to finance part of your home purchase, getting pre-approved for a mortgage will give you a jump-start on the paperwork and provide an advantage over other buyers in a competitive market. The added bonus: you will find out how much you can afford to borrow and budget accordingly.
  2. Create your wish list. How many bedrooms and bathrooms do you need? How far are you willing to commute to work? What’s most important to you in a home? We can set up a customized search that meets your criteria to help you find the perfect home for you.
  3. Come to our office. The buying process can be tricky. We’d love to guide you through it. We can help you find a home that fits your needs and budget, all at no cost to you. Give us a call to schedule an appointment today!

 

If you plan to SELL this year:

 

  1. Call us for a FREE Comparative Market Analysis. A CMA not only gives you the current market value of your home, it will also show how your home compares to others in the area. This will help us determine which repairs and upgrades may be required to get top dollar for your property, and it will help us price your home correctly once you’re ready to list.
  2. Prep your home for the market. Most buyers want a home they can move into right away, without having to make extensive repairs and upgrades. We can help you determine which ones are worth the time and expense to deliver maximum results.
  3. Start decluttering. Help your buyers see themselves in your home by packing up personal items and things you don’t use regularly and storing them in an attic or storage locker. This will make your home appear larger, make it easier to stage ... and get you one step closer to moving when the time comes!



Sources:

  1. RBC Canadian Housing Market Forecast –
    http://www.rbc.com/economics/economic-reports/pdf/canadian-housing/housingforecastAugust2018.pdf
  2. CREA Resale Housing Market Forecast Update –
    https://www.crea.ca/news/crea-updates-resale-housing-market-forecast-4/
  3. Canada Mortgage and Housing Corporation Housing Market Outlook – 
    https://www.cmhc-schl.gc.ca/en/data-and-research/publications-and-reports/housing-market-outlook-highlights
  4. TD Economics –
    https://economics.td.com/ca-housing-starts
  5. TD Economics –
    https://economics.td.com/ca-boc-interest-rate-announcement
  6. BCREA Mortgage –
    http://www.bcrea.bc.ca/docs/economics-forecasts-and-presentations/mortgagerateforecast.pdfRate Forecast

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