How to Calculate Property Value

| Selling

Real estate value is a living, breathing beast that changes with buyers’ whims and general market trends. That makes determining the value of a property, shall we say—complex. To help you understand why calculating property value is so challenging, let’s look at all the factors that require the old-school kind of knowledge AI and Google searches can’t possibly deliver.

Understanding Assessed Value vs. Market Value

You can’t rely on the assessed value listed on your latest MPAC (Municipal Property Assessment Corporation) report to calculate property value. MPAC assessments are used to calculate property taxes and distribute them fairly based on market value and property type. The thing is, these assessments take place every four years and don’t consider important factors based on your home’s specifics. They are based on mass appraisals, not individual house assessments.

Adding to the inaccuracies, the Ontario government postponed the scheduled 2020 Assessment Update due to COVID and then filed a regulation to amend the Assessment Act in 2023. So now, the assessment cycle is out of sync, and the postponement impacted reassessment through the end of 2021-2024. Property assessments for the 2026 property tax year will continue to be based on fully phased-in January 1, 2016 current values. In other words, the assessments are way off.

Although market value is part of MPAC assessments, going by market value a) Provides current market value, and b) considers trends and individual home specifics for a far more accurate price.

Planning a home sale soon? Read these posts to get more tips and insights into the process: 

How To Find Out How Much Your House Is Worth

Here are a few ways to find out your property’s worth:

Online tools

There are endless home value calculators available online that use data like algorithms to provide free estimates. While many platforms access user-submitted data, the specifics of your home and area really can’t be accurately calculated, so this method is only good if you want a very rough idea of your home’s value.

Square foot cost

If you have the time and a calculator, you can look at home prices in your area and check individual listing to find the square footage. You can then divide the price by the square footage to get the square footage cost and use that number to calculate your home’s price based on your own square footage. Oof. Again, this approach only provides a rough idea and takes a lot of mad math skills.

Professional appraisal

Mortgage lenders use licensed appraisers to provide unbiased home evaluations through detailed inspections. Their appraisals are most commonly used to confirm a home’s value before approving a mortgage for a specific property. Of course, you can hire a certified appraiser, but they don’t consider the sellability of your home from a buyer’s perspective, plus they charge from $500 to $1,500 depending on the property size.

Realtor evaluation

A realtor-led home evaluation is the best way to determine your property’s fair market value. Most real estate agents offer free home evaluations, so it’s really the smartest way to go – as long as you choose an experienced Toronto real estate team like us (blush).

Request a free market evaluation from The Christine Cowern Team today and see what your home is worth in today’s market!

How To Determine Fair Market Value

So what is the “fair market value” of a house? Fair market value is the price the market will bear, or basically what buyers seem willing to pay on average in your neighbourhood. There are several factors considered when calculating property value, including:

Comparative Market Analysis (CMA or comps)

Our comps consider recently sold properties in your area to see where prices sit for homes like yours. You can’t do this yourself, as you can only access listed prices, not what homes actually sold for. There’s a big difference.

Evaluation

We tour your home to provide an unbiased value based on:

  • House size
  • The number of bathrooms and bedrooms
  • Current condition
  • Unique features, both desirable like a garage or refinished basement and undesirable such as a bedroom made into a ginourmous walk-in customized closet
  • Upgrades, like renovated kitchens and bathrooms, and their relevance to your typical neighbourhood buyer

Amenities

Things like location and your neighbourhood’s desirability, schools, transit, parks, etc.

Market conditions

Are buyers winning, or are you in the driver’s seat? Is inventory in your area high or low? What are interest rates? How is consumer confidence?

Home-specific adjustments

We consider all of the above and compare your home to others in the area, then adjust the price based on the pros and cons of your property.

Get more home-selling insights with these posts next:

Can I Sell My Home without a Realtor®?

How Early Can You Prepare Your Home For Sale?

Should You Ever Accept a Low Offer as a Seller?

The Bottom Line

Finding a trusted, experienced real estate team is the only way to understand the fair market value of your property.

That’s where we come in. Get in touch with The Christine Cowern Team today by calling us at 416.291.7372 or emailing us at hello@christinecowern.com!