What is My Home Worth?

Determining the value of your home is not as straightforward as many might think.
Property valuations are ultimately just opinions of what a buyer may be willing to pay in today's market. Depending on who you ask--whether it's a real estate agent, a property valuer, your friends, neighbour or even your own estimate--you will likely receive a different price.
Here's what you need to know about assessing your home's worth.

The Subjectivity of Property Valuations

Unfortunately, there is no exact scientific formula that determines the value of a home. Personal attachment to your property can skew your perception of its worth, a psychological phenomenon known as the "Endowment Effect." Sellers often believe their home is worth more than the market suggests simply because of their emotional connection to it.
Similarly, real estate agents may not always provide an objective estimate. Some agents might overstate a home's value to secure the listing, only to later condition the seller to lower their expectations as market feedback rolls in. Professional valuations by licensed valuers are typically the most reliable, but these can cost several hundred dollars and are often conservative.

The Role of Comparable Sales

The best way to estimate your home's value is by analysing recent comparable sales in your area. This is the same approach used by professional valuers and real estate agents.
(Be cautious not to factor in what you need or want to get from the sale--these personal financial goals have no influence on market value.)
When researching comparable sales, ensure that you are comparing properties with similar features, size, location, and condition. The more accurate and unbiased your comparisons, the closer you will get to a realistic market value. For most homes there are many comparable properties an agent can use, however occasionally there are some very unusual and unique properties which can be a little more difficult to put a price estimate on, but a good agent should nevertheless be able to price any home.

Can You Trust an Agent's Estimate?

Real estate agents often provide a price range rather than a fixed price. By law, this range should be within 10% (e.g. $500,000-$550,000). However, not all agents provide these figures objectively. Some may simply agree with the seller's desired price to secure the listing. To ensure an agent's estimate is credible, ask them to support their valuation with recent comparable sales. This will help you gauge whether they are being truthful or just telling you what you want to hear.

The Only Opinion That Matters: The Buyer's

At the end of the day, the only true way to determine your home's worth is to list it on the market and see what buyers are willing to pay. The market dictates the final selling price, not the seller, the agent, or even a professional valuer. If the offers align with your expectations, you can proceed with the sale. If not, you always have the option to stay put.

Conclusion

Estimating your home's value requires thorough research and an unbiased approach. By analysing comparable sales, being wary of inflated agent estimates, and understanding that buyers ultimately set the market price, you can position yourself for a successful sale. Whether you decide to list your home or not, having a realistic understanding of your home's worth is crucial for making informed decisions.