What is My House Worth?
How Do I Determine
Home Market Value?

How to answer your question, 'what is my house worth?' is really quite simple, if you have help, of course.

You could contact an appraisal company who specializes in home appraisals, hire them and pay a flat fee for service. But keep in mind that it's just a considered opinion. An appraised house value does not necessarily equate with fair market value.

Or you could contact a few REALTORS® to tell them you plan to sell your home, and want to interview them for the job. To be fair, you should at least inform each of them, up front, that they're competing, and that you may attempt to sell privately first, if that is, indeed, your intention.

They're experts at determining real estate values. Each REALTOR® may offer the benefits of their experience by preparing an extensive and detailed Comparative Market Analysis (CMA) in order to answer your question, 'what is my house worth?'. They may assume this task, and not charge you a ...

Fee For Service

Or they may not want to compete. But I suggest you ask them if there will be a charge for their work. Some may charge a flat fee, which, if you list with them within a certain period of time, they may deduct from any future commission earned from the sale of your house. Make sure you get this in writing. This might work, or it might not, since they may opine high in hopes of convincing you to list with them.

Or, to answer your question, 'what is my house worth?', based on neighbourhood rumour and your local real estate newspaper, ...

You Guess

By definition, market value is the highest price estimated in terms of money which a property will bring if exposed for sale on the open market, allowing a reasonable time to locate a buyer who will purchase with the knowledge of all the uses to which the property is capable of being used.

Wow! That was technical. In other words, to accurately come up with an answer to your question, 'what is my house worth?', to determine its fair market value, you must ...

List It For Sale

To decide on a list price is also quite simple, provided, of course, you have access to accurate and current information on comparable properties that have recently been listed for sale, sold or expired. And provided you have considerable experience in evaluating homes objectively so as to have the ability to provide ...

An Educated Guess

The more accumulated knowledge and experience of the guesser, the more accurate will be the estimate of market value.

A qualified real estate agent who is familiar with the local market will have a general idea of the value of your property before they even step inside for an inspection. They'll already know the price range for your neighbourhood.

So, when they appear at your front door, they're beginning to refine their general opinion based on what they see, or smell, or hear.

For example, if your front lawn is in rough condition, or your walkway is cracked and in need of repair, or your garage door is dented with peeling paint, or your front entrance is unwelcoming with chipped paint and a broken screen door, they make a negative monetary adjustment in their mind.

They step inside to a beautiful foyer with a fantastic mosaic tile floor, warm gum wood paneling and etched glass French doors to the formal dining room, then suddenly, their opinion goes up. Ok - they're thinking you're not 'outside' people. But inspecting the basement brings another negative adjustment when they find dampness and mold. Down it goes again. Oh, but look at this gourmet kitchen with Brazilian granite counter-tops, warm cherry cabinetry, high-end stainless appliances and porcelain floors. Up it goes again.

Anyway, I'm sure you get the idea. The ability of an experienced REALTOR® to objectively view your property, and honestly apply their knowledge in the final analysis, is where we justify a very large portion of our ultimate fee for service.

It's That Important

If you like percentages, how about 40% of our fee is earned at this point, another 40% during negotiations of the offer(s), and the remaining 10% with everything else.

Once the inspection is completed, everybody sits down at the kitchen table to allow the REALTOR® to do their presentation. This may be a sophisticated PowerPoint presentation on their laptop computer, or it may be a binder with colour graphs, testimonial letters or print-outs of comparable current and sold listings in your neighbourhood.

I personally prefer not to simply offer my opinion right away. I feel it's a better idea to show the homeowners how I arrived at my conclusion. Then, it's not just my opinion, but a solid justification.

And I don't pull any punches. To answer your question, 'what is my house worth?', as any good agent will do, I provide detailed information and my professional considered opinion of your home. I tell my sellers what they ...

Need to Know, Not Necessarily What They Want to Hear

In other words, a good agent will not 'buy' the listing by suggesting an unrealistically high estimate so as to convince the seller to list with them, only to call the seller a few short weeks later asking for a price reduction.

The figure I normally provide is not a specific amount, but a fairly tight range. Evaluating real estate is an ...

Inaccurate Science

... at the best of times. So, I suggest that to provide a specific figure is opening the door to possible disappointment and bad feelings later. I explain that anything can occur in an open market. So, I prepare my sellers for the future possibility of having to adjust the list price downward.

When a good real estate agent provides this range, it's not for the list price. It's a hoped for sale price. The conversation about the list price is next.

Once you've established an agreed expected sale price range, we then move on to the next discussion ...

Asking Price

There are two schools of thought here - list high and be prepared to reduce the price if there's no interest, and yet again if there's buyer interest, but no offers. This is the traditional method. Countless numbers of this type of listing fail to sell, not only from an unrealistic list price, but also from an unreasonably long time on the market.

Buyers often not only refuse to view or offer on properties that they and their buyer agents feel are over-priced, but they also show no interest in listings of properties that have been on the market for a long time, even at a price that might have generated a sale if originally listed at that amount. They suspect either serious defects in the home, or unreasonable sellers. They tell themselves that nobody else wants it, so ...

Why Should They?

This method fails to take advantage of the most active time period of any listing - the first couple of weeks. At any given time, there's a pool of buyers scouring the new listing inventory. They've already viewed and rejected existing stock, and are just looking for new listings. When a property that might suit their needs appears, but it's not priced competitively in their view, they ignore it. However, if the asking price is fair, they contact their buyer agent, or the listing agent, to arrange a viewing.

So, if you decide to ignore your agent's advice, or you're given poor advice by the REALTOR®, your over-priced listing will generate little if any activity.

Obviously, the best way to get sold is to ...

Price Your Home Realistically

I recommend setting the list price fairly close to the hoped for sale price. You'll not sell your property without buyers viewing it. So, choose the right bait - a fair price.

Sometimes, a real estate agent will suggest deliberately under-pricing your property, and possibly delaying the presentation of any offers. This strategy can prove effective for the right type of home in the right neighbourhood. It requires a strong seller's market. The results may be a competitive situation wherein multiple buyers bid on your home. Each buyer and their agent is kept unaware of the contents of the competing offers, hence making it a blind bid situation. This methodology often results in a property selling well over the asking price. Happy day for the seller, but certainly not for the buyers. And these situations obviously make it virtually impossible to answer, in advance, the question, 'what is my house worth?'.

The risk in this scenario is if only one buyer makes an offer. You could end up either selling at a lower price, or raise the list price. The latter can discourage future showing activity.

So, bottom line - How to answer your question, 'what is my house worth?' Hire a good REALTOR® to establish home market value, and place your trust in them.

To read more about the advantages of hiring a REALTOR®, and answering your question 'What is my house worth?' Click here.

You can also explore the website of The Toronto Real Estate Board to answer other questions. To visit its page specific to consulting a REALTOR®, click here.

Return to Home Page