The market value of a home is a central piece of the real estate puzzle. We need to be in the loop about the multiple criteria that determine it in order to grasp its significant impact on real estate. It greatly influences buying and selling transactions by providing guidance to buyers and potential buyers to make enlightened decisions. Let's take a closer look at its pivotal role in today's market.
What is market value?
Market value refers to a property’s estimated worth. It can be based on comparisons with similar properties, simple methods or expert advice. Various factors come into play such as geographical location, precise characteristics of the house, local real estate market trends and general condition of the property. In other words, it's a key factor in the real estate sector, influencing buying, selling and investment decisions.
Although the terms are often used interchangeably, it's important to distinguish between a market value estimate and a market value assessment. An estimate is usually based on an approximate calculation of property value that takes into account factors such as property size, location, general condition and local real estate market trends. A market value assessment is based on a rigorous process, done by qualified professionals and is a lot more detailed.
In real terms, a market value estimate is done by real estate brokers who use their knowledge of the local market and comparative analyses. Note this estimate is for informational purposes only and is not an official appraisal. You need to hire a chartered appraiser for it to be considered formal and legal.
Why use Confia real estate services in this context?
By using a real estate broker recommended by Confia to sell your property, you will receive support depending on your personal situation. What’s in it for you? You get a sale price for your home that’s based on in-depth knowledge of the local market, effective marketing, advice on how to perfectly stage your home and much more.
Real estate brokers recommended by Confia will use their considerable expertise to determine an attractive sale price and provide relevant incentives. This is intended to drum up interest from potential buyers.
Who is qualified to assess the market value of a home in Quebec?
What is the market appraisal process in Quebec and who should we rely on to complete it? These are two very legitimate questions we need to address.
Chartered appraiser: the kingpin of real estate valuation
The main authority responsible for assessing a property's market value is the chartered appraiser, a professional trained and accredited by the Ordre des évaluateurs agréés du Québec (OEAQ). We recommend that you call on this person to get an accurate, reliable appraisal.
Municipalities will carry out property assessments to determine the value of residences for the purpose of calculating municipal taxation. While useful for predicting homeowner expenses, municipal assessment is not a reliable method for assessing a home’s true value. It is only used to calculate annual municipal and school taxes, which increase with market value (the higher the market value, the higher the property taxes).
Real estate broker: key partner in your buying or selling project
Brokers have a role to play in the sale or purchase of a property. They leverage their in-depth knowledge of the real estate market to sift through all the data available in comparative analyses. This method is commonly used to assess a home’s value based on recent sale prices of similar properties in the same geographical area.
Real estate brokers help establish fair transactions by advising sellers on setting realistic prices and by guiding buyers through negotiations. They are the people of choice to support you in the transaction process, as they take on an advisory role. Keep in mind that although a broker's market value estimate has no legal standing, it remains highly relevant to the selling party.
The Confia personalized pairing service helps you find a real estate broker who corresponds to your needs and interests.
Buy or sellHow to determine market value?
Market value is set in various ways. A chartered appraiser must use one or more methods during the assessment process. Be aware that financial institutions provide appraisers with criteria and then follow up to ensure these points are examined during an assessment. In other words, this may involve the application of restrictive criteria that these institutions require the appraisers to review.
A real estate broker also plays an essential role in the process. When a person wants to sell their home, they can team up with a real estate broker recommended by Confia. The methods used to assess market value are similar to those used by chartered appraisers (for example, run a comparative analysis with similar properties recently sold and consideration of potential income).
The broker suggests a price to the seller (or a price range) that reflects the property’s market value on the real estate market (also called market value estimate). In some cases, the broker (or even the Confia real estate agency) may seek the advice of a chartered appraiser – if the home includes several non-standard elements, when an atypical situation arises or for the division of property, etc.
Comparative market analysis approach
Comparative analysis compares a property's features with similar properties recently sold on the market. Real estate brokers can do this very effectively.
Cost approach
It is based on the calculation of a property’s replacement cost, to which the cost of the land is added. This method determines the market value by adding the cost of building a new similar property to the value of the land itself.
Income approach
This is used for commercial properties or rental properties. It involves an estimation of future revenue (that a building could generate), then converting this amount into a realistic value.
What are reasons to have your property appraised?
Let’s review when it may be necessary to assess a property’s market value.
Sale or lease An assessment is made to set a price that is competitive on the market when you want to lease or sell a property.
Divorce An assessment is used to verify the value of real estate to be divided between spouses in the event of divorce or separation.
Financing The market value is used to determine the loan amount to apply for, whether for a mortgage or any other type of financing associated with the property being considered. This makes it possible to make informed decisions about buying or selling a property, taking into account the available budget.
Insurance A property is appraised to ensure it has adequate coverage in the event of damage or a loss.
Estate An assessment is used to identify the value of a home for estate settlement purposes.
Tax audit It is useful for identifying the assessed value of a property for property tax purposes.
Redevelopment or renovation It is advisable to consider this before embarking on a renovation project, which can help increase the value of the home.
What links the real estate industry to the economy?
The real estate industry is closely linked to the economy. Fluctuations in supply and demand in the real estate market are in turn reflected in the prices of properties for sale. Real estate assessments are constantly evolving in response to many factors!
It is fundamental to understand that the sale price refers to the amount your home should be sold in the current market but the market value changes over time, according to demand.
It’s worth noting it does not always reflect a home’s actual value, like if overbidding takes place when a property is acquired at a price higher than the initial asking price. It may also happen that the sale price is lower than the market value, like in the event of a repossession.
Discover 8 criteria that influence market value
Let’s review the eight key criteria that are instrumental in accurately assessing market value. A proper understanding of these factors can not only facilitate negotiations during a real estate transaction but also ensure the satisfaction of all parties involved.
1. Geographical location
One of the first things to determine is where a property is located. The proximity to amenities, the neighbourhood, access to public transit and the quality of local schools are all major factors to consider during an assessment.
2. Living space and lot size
Generally speaking, a big house with a spacious lot has a higher value because it provides more living space, not to mention opportunities for expansion and development. Living area square footage and lot size are both key factors in assessing market value.
3. Year of establishment
A home’s construction date affects its value. Recently built homes have attributes that need less maintenance. Older dwellings offer historic cachet but often require more costly upkeep.
4. Property category
Property category (single-family, apartment, condo or commercial property) also impacts market value. The needs and preferences of potential buyers vary based on property type, which affects supply and demand.
Ultimately, the property category is an essential element to add to the mix when analyzing the market and while setting a price that addresses the evolving expectations of aspiring homeowners.
5. Construction standards
It goes without saying but is worth repeating, properties built with top quality materials and a carefully considered design are more attractive on the market. Building quality, choice of materials and finishes used is taken into account when a property is assessed.
6. Additional facilities
A pool, a landscaped garden, a garage, a finished basement, all examples of additional facilities that add value to a property by giving it something extra that can tick off some more boxes for potential homebuyers.
7. Special features
Some homes gain value from attributes such as a panoramic view or special design features like solar panels, energy-efficient windows, landscaped gardens and advanced home automation technologies.
8. It-factor
A property’s aesthetic appeal and overall style create a distinct charm that increases its value. We’re talking about fireplaces, exposed beams or other neat architectural details.
Tips to increase your property’s sale price
Is the market value of your property sitting lower than you had expected? You should consider maximizing its appeal in order to optimize the sale price when the time comes to put it on the market and attract potential buyers. All you need to do is make a few strategic moves.
Show your home in the best light
Use high quality professional photos to advertise your home. It should be well maintained and looking its best.
Depersonalize rooms before showings by removing some items. This way, it will be easier for potential homeowners to envision themselves in the space. Another tip: highlight attributes your home has to offer, characteristics like access to public transit, schools and parks.
Renovate with a goal in mind
Renovating a property can prove to be a wise solution to significantly increase its market value. Carrying out any necessary renos, whether it involves sorting out structural issues or visible defects, will contribute to the overall condition of the home and that usually boosts the sale price.
If you decide to focus on the exterior, you could update your home’s siding. Another winning move would be to install or upgrade your deck.
Moving inside, both minor tweaks and major projects (like a kitchen renovation) will refresh the interior space, while replacing outdated appliances will up the home’s comfort level and general appearance.
Finally, by replacing old doors and windows with energy efficient upgrades and installing eco-friendly appliances, you’ll not only cut your household expenses, you’ll also add significant value to your home. That is a definite win-win!
Have a project in mind? Let an expert renovation advisor at RenoAssistance help you get the ball rolling.
A tool to assess your property’s market value
Have you heard about the EspaceProprio app? It has a new free feature, a tool that will automatically assess the market value of your property.* It’s important to note this service is provided for informational purposes only and does not replace professional advice.
This will allow you to target features that affect the value of your home. You can make informed decisions more easily about buying, selling, maintaining and renovating your property.
Download the EspaceProprio app on the App Store or Play Store, then enter info about your property. The tool will calculate a market value assessment in no time!
*The value provided by the market value assessment feature does not constitute an appraisal, an actual value or a guaranteed sale price, or the opinion of a real estate broker or chartered appraiser as to the price or fair market value of the subject property. Information is provided for informational purposes only and should never replace the advice of a professional when assessing the market value of a property.
FAQ
Can I assess the market value of my property?
You can estimate the market value of your own home but not assess it. That’s when a chartered appraiser enters the picture. Their professional expertise is required to make this complex calculation.
How do I determine the market value of my home?
Use the free market value assessment tool available on the EspaceProprio app on App Store or Play Store. Contact the advisory service team at info@espaceproprio.com with any questions you may have.
How can I find a real estate broker to help me set a sale price for my home?
Right this way to access the free Confia pairing service where you can easily find a broker to meet your needs. A real estate advisor will answer all your questions and then guide you through each step of the process. They can provide a market value estimate of your property.
Contact the Confia team