People always want to know what their home is worth, and for good reason. For most people, their home is their biggest asset, so of course they want to know its value! Let’s take a look at what I suggest are good indicators of value and consider how they can help you determine how much your own home is worth.
1. Location: Well, everyone has heard that location is the primary factor in value, so it shouldn’t come as a surprise to you to see it as my #1. A high demand area is key. It’s important to know that your home could be located in a very desirable neighbourhood, but it might actually be situated in a poor location within that area. The specific location might be too close to an undesirable element such as train tracks, hydro towers, or a noisy public transportation stop. Your home won’t reflect the same value as a neighbourhood home that is further away from the stigma.
When it comes to supply…there are similar findings. In a good neighbourhood, when supply is low the desire doesn’t disappear, it might actually grow! People always want what they can’t have. On the other hand, too many properties available at the same time in a neighbourhood creates more choice for buyers which could lessen the market value of your home. In a nutshell, High Demand + Low Supply = Higher Value
2. Condition: The overall condition of your home affects value. Are the mechanics older? Is there newer technology that homeowners prefer? I’m talking about things like wiring such as aluminum or knob and tube, and high efficiency furnaces vs older inefficient systems. Is your property kept up? Has everyone else updated and you haven’t? If all of the houses in the neighbourhood have a new roof and yours is at the end of its life then unfortunately your roof will affect your home’s value. And not in a positive way! However, if only a small percentage of your neighbourhood’s homes have a new roof, then your older roof won’t make that much of a difference overall.
3. Size: Generally speaking, price per square foot can help you evaluate your property. This is especially true regarding condominium apartments. It can also hold true for houses, but with houses other size factors…size of the lot, size of the rooms…could come into play as well. Some houses are the same in size but differ in layout. One layout may be more desirable than another, when you take into consideration the flow or functionality. Let’s say there are two homes with the same square footage: one home features three bedrooms while the other features four bedrooms. Guess what—neither home is more/less valuable than the other. Some people may think a four bedroom would sell for more money, but that’s not the case. Since both homes offer the same square footage, the three-bedroom home may feature reasonably sized, comfortable rooms whereas the home with four bedrooms has jammed those four rooms into the same amount of space. You could end up with two very small bedrooms that are not really functional. Personally, I would buy the three bedroom home. But then again, I don’t have five kids!
Same thing with bathrooms. An extra bathroom may not add a lot of value, necessarily. If you live within an area that usually has only one bathroom upstairs, say an older home, but you were able to install an ensuite in the master bedroom, you will recoup more than the cost of construction! However, if you already have multiple bathrooms in a newer subdivision and you add another one in the unfinished basement…it might not make much of a difference. So, two baths instead of one would be great, whereas five baths instead of four –not so much. Got it?
4. Presentation: How does your home show to potential buyers? This point is a contributing factor regarding the worth of your home because the answer lies in a buyer’s perception. For example: a dirty home will not be as valuable as a clean home. To a buyer, a dirty home seems neglected and represents an investment of money and time once it becomes theirs. Let’s be honest here, a home with noticeable odours will not be as enticing as a fresh smelling home. A home that reflects pride of ownership can make all the difference. So, stop smoking in the house and get out the rubber gloves!
5. Exposure: If you’re selling, this is very important. I’m not talking about leaving the curtains open in the bedroom! I’m talking about target marketing and highlighting the right features. The way you market the home for sale will have an effect on the selling price at the end of the day. You want to expose the property to every single buyer out there, for starters. Then you want to make sure you highlight the features that those buyers are looking for. Then you have to entice buyers with the proper photography and descriptions.
As you may have gathered, there isn’t an easy checklist to determine the value of real estate. There is so much to consider and each property or situation is unique. It’s a lot easier for your realtor, who does this every day, to determine the value of your property than it would be for you to try and muddle your way through it, so draw on their expertise and sit back and enjoy the results!