How Do You Know What Your Home Is Worth?

If you're thinking about selling your home — or even just wondering where you stand — one of the first questions you're likely to ask is:

What is my home worth in today's market?

It's a simple question, but arriving at an accurate answer isn't always simple.

Online estimates can provide a starting point, and your latest property assessment may be interesting, but neither necessarily tells you what a buyer would be willing to pay for your home today.

Determining market value means looking at your property, recent sales, current competition and what's actually happening in your local real estate market.

Here's how we approach it.

Start With Recent Comparable Sales

One of the most important indicators of value is what buyers have recently paid for similar properties.

These are often referred to as comparable sales or “comps.”

Ideally, we're looking for properties that are similar to yours in areas such as:

• Location

• Property type

• Size

• Age

• Condition

• Number of bedrooms and bathrooms

• Lot size, where applicable

• Parking

• View

• Floor level for condos

• Outdoor space

• Renovations and upgrades

The more similar the comparable property is to yours, the more useful the sale can be when estimating value.

Not All Comparable Sales Are Equal

Two homes can look similar on paper and still sell for very different prices.

A renovated home may command more than an original-condition property.

A condo with an unobstructed view may sell differently from an otherwise identical unit overlooking a busy road.

For detached homes, lot characteristics, location within the neighbourhood, renovations, redevelopment potential and overall condition can all influence value.

That's why determining market value involves more than simply calculating an average price per square foot.

Active Listings Matter Too

Recent sales tell us what buyers have paid.

Current listings tell us what buyers can choose from today.

If you're planning to sell, your home will be competing against the properties currently on the market.

Suppose recent comparable homes sold for around a particular price, but several similar properties are now listed below that level. That new competition could affect how buyers perceive your property.

On the other hand, if there are very few comparable homes available, limited supply could work in your favour.

Both sold and active properties are important when estimating current market value.

What About Listings That Didn't Sell?

Expired and cancelled listings can provide useful information too.

If several similar homes were listed at a certain price and failed to attract a buyer, that can tell us something about where buyers may be resisting the market.

A listing price represents what a seller hopes to receive.

A sold price represents what a buyer was actually willing to pay.

That's an important distinction.

Does Your BC Assessment Tell You What Your Home Is Worth?

Not necessarily.

Your BC Assessment value and your home's current market value are two different things.

BC Assessment values are established for property-tax purposes and are based on a valuation date.

Real estate markets can change after that valuation date, and an assessment may not fully reflect characteristics that affect how buyers view your particular property.

Your assessment can be one piece of information, but it shouldn't normally be used by itself to determine a listing price.

What About Online Home-Value Estimates?

Automated online estimates can be useful as a rough starting point, but they have limitations.

An algorithm may know the approximate size of your home, previous sale information and nearby sales.

What it may not fully understand is that you've renovated the kitchen, your condo has a substantially better view, your house backs onto a busy road or your particular location within the neighbourhood is more desirable.

Those details can matter.

A proper market evaluation combines market data with an actual understanding of the property.

Condition Can Make a Difference

Buyers don't evaluate every home as if it were identical.

A beautifully maintained property that's ready to move into may appeal to a different group of buyers than a home requiring significant updating.

That doesn't necessarily mean you should renovate before selling.

Sometimes the best strategy is to make a few targeted improvements.

In other situations, it may make more sense to sell the property in its existing condition and price it accordingly.

The important thing is to understand how buyers are likely to compare your home with the alternatives available to them.

Location Means More Than the City

Real estate is extremely local.

Values can vary significantly between cities, neighbourhoods and sometimes even between different streets or buildings.

For condos, two buildings located a block apart can command different prices because of their age, amenities, maintenance history, strata finances or reputation.

Even within the same building, floor level, exposure, view, layout, parking and renovations can affect value.

For houses, lot size, street location, school catchments, traffic, redevelopment potential and proximity to amenities can all influence what buyers are prepared to pay.

That's why broad market averages only take us so far.

Market Conditions Matter

Your home's value isn't fixed.

It can change as the balance between buyers and sellers changes.

Interest rates, inventory, buyer confidence and economic conditions can all influence demand.

A home that might have attracted multiple offers in one market could face considerably more competition several months later — or vice versa.

When evaluating a property, we therefore want to use the most relevant and recent market information available.

Market Value and Listing Price Aren't Always the Same Thing

This is an important distinction.

Market value is an estimate of what a buyer may reasonably be willing to pay under current conditions.

Listing price is part of the strategy used to bring the property to market.

Depending on the property and market conditions, a home might be listed close to its estimated market value, above it or occasionally below it as part of a deliberate marketing strategy.

The right approach depends on the property, competition and the type of buyers we're trying to attract.

The Highest Estimate Isn't Necessarily the Best Estimate

If you're interviewing several Realtors, it can be tempting to choose the person who gives you the highest suggested value.

But a higher estimate doesn't make the property more valuable.

An unrealistic listing price can result in fewer showings, more time on the market and eventually price reductions.

A useful market evaluation should be supported by evidence.

You should be able to see which properties were used as comparisons, why they're relevant and how your home differs from them.

Curious What Your Home Is Worth?

You don't need to be ready to sell tomorrow to find out what your property may be worth.

Understanding your home's current market value can be useful when you're considering a future move, refinancing, downsizing or simply keeping track of your real estate investment.

Team Keenan Neilly can prepare a market evaluation using recent comparable sales, current listings and the characteristics of your individual property.

If you own a home in Burnaby, Vancouver, New Westminster, Coquitlam, Port Moody or elsewhere in the Lower Mainland, contact Kelly Huber for a current assessment of what your property may be worth in today's market.