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by Kenny on October 15, 2019

Whether as a buyer or a seller, it is in your interest to obtain the best possible price during a real estate transaction. But when the market is booming, it can be difficult to determine if the asking price is exaggerated. Here is a simple calculation method to identify where a property is positioned relative to the sector.

Identify the comparables

By browsing through the various real estate portals (with and without a broker), identify properties similar to yours for sale in the area. If there are few comparable neighborhoods, expand your search to cover a wider area. Focus on buildings of the same type – for example, semi-detached duplexes – and of a similar size. For each property, note the exact address and asking price.

Search for assessment roles

Municipal tax accounts are public information and available on the website of most cities. Retrace each of the previously identified comparable properties and note this time the municipal assessment. Although it rarely reflects the value of the market, this measure provides a starting point for comparing several buildings with each other.

Calculate the gap

Divide the displayed price by the amount of the municipal assessment to determine the difference. For example, a single storey for sale at $ 380,000 with a $ 330,000 real estate role is announced at 115% of its municipal value. By repeating the exercise for all comparables, you will get a range of difference. For example, the asking price of family houses in a sector could vary between 95% and 120% compared to the valuation.

Determine the pricing strategy

As a buyer, this information can help you identify great deals. When a property is displayed with a gap in the bottom of the range, it may be a sign of an owner looking to sell in short time. Conversely, a very high position may indicate that the seller overestimates the value of his property or “tests” the local market at a high price.

As a seller, this range helps you determine what price to post, and how far you are willing to trade. To sell quickly or if the building is not particularly attractive, aim for the bottom of the fork. On the other hand, if you can be patient and the property really stands out from its neighbors, you can advertise a higher price.

Adjust your calculations

These calculations remain approximations and must be adjusted according to the characteristics of each property. Recent construction is often of better quality, deserving a higher price. The proximity of public transit, a location in a cul-de-sac with low traffic or a site with a nice view can also increase the value. Conversely, major renovations to be done, noisy trading like a bar or the passing of a railroad nearby can put some buyers off and drag the price down the range.

Best practices: Hire a real estate professional:

Although the above evaluation method gives a good general idea, it does require some research time and is not as accurate as what a true real estate professional could produce as their estimates are based on better data. A real estate broker can help sellers determine a selling price that fits their needs, while a chartered appraiser can deliver a highly accurate report that takes into account the financial impact of every detail of a build.


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