Many of us are often curious about how much our homes are truly worth. To you, your home is priceless! But others may not see that big willow tree in the backyard as an asset.
When determining the value of your home it is always best to keep emotion out of the equation and only think about the facts. This way your home evaluation is more realistic and will lead to less disappointment down the road.
How The Current Value Of Your Home Or Property Is Assessed
The value of a property is determined by a number of different criteria ranging from the square footage of your home, to the age, to its location, construction quality, architectural features and even the number of bathrooms.
It's important to remember that a property evaluation is not a fixed or permanent number. It is simply a snapshot of what your home is worth today, in relation to current market conditions and what similar properties are selling for. This value can change over time based on improvements to the property, as well as changes in your neighborhood and the housing market.
Property Value & Mortgages
When applying for a mortgage, your mortgage professional will ask you a series of questions about your property. This information will help establish the property value, a critical element for determining the amount of your mortgage loan.
If you are buying a home your mortgage application will include the sale price along with a detailed description of the property. For refinancing, the lending value will be established after considering recent sales in your area, the latest municipal value assessment and any significant improvements you have made to the property. If you want to add the cost of any planned improvements to your mortgage application, be sure to provide all your plans and cost estimates.
Professional Appraisal
A professional appraisal may be required if a more in-depth assessment of your property is needed.
This process includes a professional assessment of the property’s physical and functional characteristics, a detailed comparison of the home to recent comparable sales in nearby areas, and an assessment of current market conditions affecting the property.
From time to time, the property value assessment will not support the loan amount requested. Should this happen, talk to your mortgage professional to explore the options that are available to you.
Top Things That Determine A Home's Value
Land As An Appreciating Asset
- It is limited supply, and no one is producing any more
- Demand exceeds supply, and prices will continue to rise
- The physical structure is a depreciating asset as it requires capital infusions for maintenance and updates from keeping it from falling out of style
Implications For Investment
- Smaller or less attractive homes can provide greater investment returns
- Locations within neighbourhoods will affect land values
- Average age of neighbours can provide clues to appreciation
- Future development can change your property’s value for better or for worse
