Home evaluation

When most of us think of a home evaluation, we think of a Comparative Market Analysis (CMA for short), which is the dominant valuation type, and often the most meaningful. Different property types (investment properties, for instance) often use different techniques. The other two main types is cost method (what it costs new - depreciation; mostly useful with commercial properties) and income valuation (revenue / rate = value). Comparative Market Analysis is the best for residential homes as it compares what is CURRENTLY for sale and what has sold recently.

I use several valuation techniques to confirm what is the proper list and sale price.

  1. Comparative Market Analysis:
    1. Buyer's market. Pay particular attention to the sales, as the market is slow and many of the listed properties only represent the hopes of the lister, and are not realistic of what the market will offer
    2. Seller's Market. A hot seller's market (what we had a few years ago), where the home prices were going up tens of thousands every month, we focussed on what was listed. The sale price yesterday wasn't helpful in predicting the price tommorrow. Unfortunately for sellers, these days are now behind us.
    3. Balanced market. Look at both the actives and the solds, being realistic about pricing. In this type of market, homes will sell in a realistic time at a realistic price.
  2. Statistical modelling. Using historical statistics to predict what the home price should be, based upon how the area / community / development has done over the last several years (or decades).
  3. New home comparison. Particularily useful in newer communities with strong competition from builders.
  4. City of Calgary Market Assessment Analysis. I've seen the city be off quite a bit with their assessments, but the information is still useful. Comparing what the city thinks the last dozen homes that sold were with, and the actual sale price, I can calculate how the market has shifted since the city last assessed.

I primarily rely on the Comparative Market Analysis, but will use these other tools in conjunction.

Call me today to see how this will relate to your particular home.


written by Matthew Dekort