When looking to sell your home, one factor is always in the balance: the market value of your property. The truth is that it is often complicated to assess property value on your own.
Many factors influence the value of a house and most sellers are afraid to sell below market price.
The experts at Courtier Immobilier Lanaudière explain how to calculate the market value of your property.
Definition of market value
The market value of a property is the estimated price at which it could be sold on the open market. This estimate takes various factors into account, including location, building condition and the current economic climate. It is determined by assessing recent sales prices for similar properties in the same area.
Market value vs. municipal property assessment
Market value and municipal property assessment are not the same thing. They serve a different purpose and are also calculated in different ways. Market value is the estimated price at which a property could be sold on the open market, while municipal assessment is an estimate of a property’s value made by the municipality for the purpose of calculating property taxes.
Market value is used primarily for real estate transactions such as purchases, sales and mortgage refinancing. It can fluctuate frequently according to market dynamics.
Municipal assessment, on the other hand, is carried out by municipal appraisers who follow standardized criteria, often based on periodic visits and mathematical models. A property’s municipal assessment is updated periodically, generally every three years in Quebec, and its main purpose is to provide an equitable basis for property taxation.
So, while market value and municipal evaluation both relate to the value of a property, they serve distinct needs and are influenced by different factors. Market value provides a snapshot of the reality of the real estate market, while municipal assessment serves as a reference for owners’ tax obligations. These differences explain why the two values can often differ for the same property.
Home appraisal: an essential step in the real estate selling process
An accurate estimate of a property’s market value enables a seller to set a competitive and realistic price and attract potential buyers. Too high a price may deter buyers, while too low a price may result in a financial loss for the seller.
Why it’s important to hit the mark
A thorough and well-documented valuation supports a strong case for the sale price, helping both parties reach a fair agreement. It also helps avoid the drawn-out negotiations that can result when there is a substantial difference between the buyer’s and seller’s expectations.
In fact, financial institutions use market value appraisals to determine the amount they are willing to lend to the buyer. An accurate estimate reassures lenders about the borrower’s creditworthiness, making financing approval easier and ultimately contributing to the success of the real estate transaction.
The value of a home reflects both market trends and buyer preferences. It can provide a snapshot of the environment in which the transaction is taking place. For sellers, understanding these trends enables them to adjust their sales strategy and choose the most opportune time to put their property on the market. It can also help them adopt best practices to maximize their return on investment.
Factors affecting property value
If you want to calculate the market value of a property, you have to know what factors influence its value. The value can vary depending on your location, the condition of the property, the year it was built or the amenities nearby.
Here is a list of factors that affect the value of your property:
- Type of property: house, cottage, apartment, duplex, etc.
- Location
- Living area of the property
- Surface area of the land
- Date of construction and renovations
- Materials used for construction
- Interior layout and functionality
- Property amenities: pool, garage, shed, etc.
- Services near the property
- The city or town’s amenities: services, security, schools, etc.
How to evaluate and estimate the market value of your home
1. Understand the local real estate market
The first factor for assessing the market value of a property is the state of the real estate market. Like any market, supply and demand in real estate will vary. Certain crises can also affect property values. For example, selling during the COVID-19 pandemic was very difficult for many homeowners.
Find out about the state of the housing market, both globally and locally. Some municipalities or regions may be experiencing downturns or upturns in activity.
The easiest way to learn about current conditions is to contact a real estate expert. Professional realtors know market trends inside out. However, you can also do your own research on the Internet or in the press.
2. Consider both internal and external factors
The general condition of your home is obviously another important factor. A well-maintained property that features recent upgrades like a new roof, renovated kitchen or updated plumbing, will have a higher market value. A home in need of major repairs, on the other hand, will be assigned a lower value.
Location also plays a major role. Houses located in sought-after areas, close to schools, public transport, shops and green spaces, are generally more valuable. Conversely, proximity to nuisances such as noisy freeways or industrial zones can reduce value.
3. Compare the value of your property with the competition
Once you have assessed your property based on what it offers to buyers, you will want to compare with what the competition is offering, also known as a comparative market analysis.
The sales comparison approach involves estimating the value of a property by comparing it with other similar properties that have recently sold. These properties, called “comparables” or “comps”, must share key characteristics with the property being appraised, such as size, type of construction, age, location, and amenities. Practically speaking, this means:
- Identifying 3 to 5 similar properties that have recently sold in your neighborhood.
- Gathering sales prices of comparable properties.
- Comparing significant differences and adjust prices.
- Calculating an average estimate or value range for your property.
Deciding on the price of your property without checking out the competition is a big mistake. You run the risk of missing the mark completely. By comparing your property with others offering similar or identical features, you can get a clear picture of the market and adjust your price accordingly.
For example, a comparable home may be priced higher if it was recently renovated prior to being sold. Understanding these nuances enables you to place your property in the right price range, making your offer more competitive and attractive to potential buyers. What’s more, this analysis helps you identify ways to increase the value of your home before sale.You can use a comparables generator to analyze other property sales.
By following the above tips carefully, you will be able to sell your property at the best possible price!
4. Rely on a professional to assess your home’s market value
Assessing the market value of your property is no easy task. Most sellers use real estate agents to estimate the value of their property. A professional realter can provide an accurate estimate that is consistent with the market and your property.
Although it involves a small investment, this is generally compensated by a quick sale at the best price. For these types of high value assets, it can be a profitable investment. Selling without a real estate agent is generally not recommended.
Professional realters are in close contact with buyers and sellers in your area on a daily basis and are therefore perfectly familiar with all the specifics of your region.
At Courtier Immobilier, we offer you a free real estate appraisal via a comprehensive form, to give you an initial property value estimate for your home in Lanaudière. 🙂
Assessing the market value of a prestige property: a whole different game
Bonus: our real estate broker Guillaume Tremblay explains what you need to know about evaluating the market value of a prestige property. It’s in French but you can activate the subtitles. 🙂
Let the experts at Courtier Immobilier Lanaudière help you sell your home
Are you selling your property in Lanaudière? Selling your house is an important step in your life. Knowing how to evaluate the market value of a property is essential. Not only to sell quickly, but also to sell at the best price.
Hiring a real estate agent can be a decisive factor in your home sale. The real estate agents at Courtier Immobilier Lanaudière are experts in property evaluation in the Lanaudière region.
Contact us now and our brokers will be happy to discuss and meet with you. We will work together to assess the most suitable value for your property and help you obtain the best possible outcome for your property sale.
