A good agent will pay very close attention to the recent market data, to help you establish a fair price range for the house you are interested in buying. Houses that have been sold recently in the neighbourhood that are similar in style and size are compared. Adjustments are made for differences.

Physical Factors

• Location (neighbourhood, quiet versus busy street, crescent versus court etc.)
• House type
• Lot size (frontage being the most important factor, particularly in the newer neighbourhoods) and adjustments if appropriate for what the home backs onto.(ravine properties tend to fetch large premuims)
• Square footage (basement area is not included)

• Upgrades
• Condition
• Number of garages
• Layout
• Finished basement
• Pool
• Landscaping

How are these dollar amounts arrived at? It is not the cost of the improvement but the value that the improvement adds, that is the price that a typical purchaser will pay for the benefit. These adjustments are market determined, and seldom reflect the price paid.

Market value is frequently less than the price paid but can sometimes be surprisingly more!  For example, the market value of a swimming pool or a finished basement tend to be considerably less than the actual cost. Granite kitchen counters, on the other hand, can fetch a higher price than the actual cost.

Market factors that affect market value:

Timing
This is one of the most critical adjustments. Appraisers, when evaluating a property, prefer to go back no more than 3 months, making adjustments, when necessary, for time. This is one of the most carefully evaluated factors.

Timing factors include:

• Market timing in relation to comparables
• Economic climate
• Time of year
• Supply and demand - buyer versus sellers market.  Greater demand than supply translates to a sellers market and higher prices. Greater supply of homes than demand translates to a buyers market and lower prices.