What Is A Home Valuation?

home valuation

Maybe it’s just time to move on, you’re itching for a change of scene. You’re looking at homes across the country, and wondering what kind of home you’ll be able to afford. It just might be time to consider scheduling a home valuation. Home Valuations are an incredibly important, and yet underutilized tool offered for free by many businesses. In short, home valuations are an estimate of the properties’ value. This value is used by many industries, and is not exclusive to real estate, but it can be a great way to get a ballpark idea of what you can expect to receive for your home, and where you should start setting your price.

When Are Home Valuations Used?

Home valuations are frequently used when looking to sell homes, but are also often used when financing homes, businesses, or anything else. Calculating insurance, Taxes, and much more!

What Factors Make Up A Home’s Value?

A Home’s value takes a lot more into consideration than simply the historical prices of a home. In general, the value is based upon 4 determining factors. These factors include:

  • Demand
  • Scarcity
  • Utility
  • And the ease of Transference

Each of these factors play a major role in determining the value of a home.

Demand

The most obvious determiner of value is the demand for a home. The higher the desire for homes of your size, and style, or in your region, the higher the value of your home. But on the other end of the spectrum, the lower the desire for homes of your size and style in your region, the lower the value of your home. For example, Ontario Canada as a whole is a very desirable place to live, The demand for homes there is very high and it drives home values through the roof. But the demand for homes is not consistent all across Ontario. The Toronto area while clearly having the greatest supply, has a demand that outstrips the rest of Ontario by a long shot, and home pricing reflects it with an average home price of about $805,000 according to Zoocasa.

Thunder Bay on the other hand is located miles away from Toronto and the job opportunities it brings, subsequently decreasing demand significantly for homes in the area. As a result, the average home price in Thunder Bay plummets down to an average of about $218,000. Everything from economic development, to neighborhood, home style, and size all play a role in the amount of demand there is for a home. Any good home valuation will look at several of these factors in determining current demand for your home.

Scarcity

Scarcity, or availability plays another huge role in determining a homes price. Scarcity in this instance does not specifically refer to the lack of supply, but is a double edged sword when used in home evaluations. The harder it is to find homes, the more they are worth, but the easier it is to find, the less each home is worth.

Utility

This factor is a much more fun and interesting factor than the relatively cut and dry scarcity factor. Utility is the property’s ability to meet the needs and wants of it’s future owners. This factor is not completely summed up in the present, but also extends far into the future. For example, A young couple booking for a home would find many 1 and 2 bedroom houses available at better prices than the 3 bedroom variety even when the square footage is relatively comparable. This is mainly due to the 3 bedroom’s future utility. The couple may really only need one bedroom at the time they are looking to purchase a house, but as their family expands, 2 and 3 bedroom houses are able to meet those expanding needs, unlike the 1 bedroom homes. The price of each home is adjusted by its ability to meet both current and future needs. The larger a home’s utility, the higher it’s value.

Ease Of Transference

Despite the scary name, this factor is another simple one. The value of a home increases or decreases depending on the ease with which it can have it’s deed transferred, or, the ease with which it can be sold. The more complicated, and the harder it is to get sole ownership rights, the less the home is worth.

Closing Remarks

Finally, it’s important to remember that while the terms are often used interchangeably, the value and the price of the home are not equal. In a perfect world, they are the same, but in reality, sometimes the purchase price can be more than the value of the home, and though possible, it is less than the value of a home much less often. An example of this is if you were to purchase a home for $200,000 in a good neighborhood, great yard, and decent space inside. You’d be pretty excited about it! But all of a sudden you pull down some of the sheetrock in an attempt to do a slight remodel, only to discover the house is infested with termites! All of a sudden what seemed like a decent purchase price has proven to far exceed the value of the home. 

Connecticut Real Estate

Connecticut Real Estate

Buying a home can both an exciting and stressful experience. Whether you are a first time Connecticut home buyer or a seasoned homeowner, it’s always helpful to have an experienced real estate agent on your side. Being able to trust your real estate agent has your best interests in mind is crucial to easing the home buying process. An experienced agent can help you find the best homes on the market that fit you and your needs. They know the area, the people, and the market. Let your agent do the legwork, while you sit back and focus on the other aspects of moving such as packing! Continue reading “Connecticut Real Estate”

The Basics of Selling Your Home

Family That Just Bought A New Home

Selling your home can seem like a difficult task. And in all reality: it is. However, getting all of your bases covered will make it that much easier.

One of the most important aspects of doing anything right, is having knowledge on your side. In this post, we’ll be discussion the basics of selling your home, including what documents you need before you can sell your home, how to add more value to your home, and the measurements and calculations necessary to know the square footage of your home.

Continue reading “The Basics of Selling Your Home”