How to increase the value of your home, and other expert tips!
Buying a home is an important life step. What do you need to know to make the right decision? How do you get a property to gain as much value as possible?
We turned to the Appraisal Institute of Canada for expert tips!
Home appraisal: what is it?
A home appraisal is an independent and unbiased opinion of the value of your property, completed by a qualified appraiser, to determine the price at which the property in question would likely be sold if it were put on the market.
How do you appraise different types of buildings?
There are three types of methodologies for assessing the value of buildings. The first is the comparison-based method, in which the appraiser gives an opinion on the value of the property by carrying out an analysis of sales made or in progress, or real estate listings of properties that have characteristics comparable to the property in question. This is the most widely used method in the residential market.
The second is the cost-based method, which involves estimating the value of the building and the land separately and then adding them together to determine the real value of the property. The total cost estimate is adjusted by deducting depreciation of the home and taking into account improvements to the land.
Finally, the income-based method is an analysis of the property's annual income and expenses to determine the net present value income.
When buying a home, what do you need to consider to determine its value?
When buying a home, it is important to think about your own life goals. Do you plan on living in your home for a few years or for the rest of your life? Are you thinking of renting it out or living in it yourself? No matter what your plans are, you will need to consider the general condition of the property and determine what improvements you will need to make in the short, medium and long term.
Why have housing prices risen so drastically over the last few years?
Unfortunately, the pandemic didn’t just affect Quebecers’ health. It is also responsible for the explosion in the demand for property, especially single-family homes. From wanting more space to needing a change or simply looking for a fresh start, people had a long list of reasons for purchasing property—and supply did not increase as quickly as demand. The result? Housing prices in Quebec increased by an average of 20%, according to one study. With the pandemic behind us, we can look forward to an eventual lowering of house prices.
What are the top five improvements a homeowner can make to their home to increase its value, according to the experts?
The top five improvements that can generate the highest return on your investment:
- Renovating the kitchen
- Renovating the bathroom
- Repainting the interior and exterior
- Updating the décor
When it comes to renovations, keep in mind that improvements that are consistent with the value of your property and the market, and are done by professionals, are usually a better investment.
Make sure you assess your needs well and don't overdo it. Investing in an expensive project might have the opposite effect of improvement within a given market, and the investment might only be partially recognized by future buyers.
Five types of renovations that increase the value of a property:
- A finished basement
- Sun rooms / additions
- Decks / fences
Five types of renovations that generate longer-term value:
- Replacing the roof
- Updating the heating and cooling systems
- Replacing windows and doors
- Updating the electrical (panel, wiring, sockets, fixtures)
- Repairing structural defects
Focus on energy-efficient, long-lasting upgrades. Also remember that constant maintenance will greatly reduce the potential costs of future renovations. Don't underestimate the simple upgrades, either. New handles or a coat of paint can make a world of difference.
What are the factors that can decrease the value of a property?
Changing market conditions may impact the supply and demand for comparable properties as well as the attractiveness of a specific property. Likewise, constantly postponed maintenance, or finishes that are out-dated or of poor quality, can have a negative effect on a property's attractiveness and value.
What general advice can you offer?
- Make sure you get a building or renovating permit. Take the time you need to obtain the appropriate permits from your municipality or the appropriate authorities. This is a good step to ensuring that the renovation work complies with the building codes.
- Use the services of a designer, architect or contractor. They can help you draw up a plan, advise you on renovations or assist you with the construction phase. This will ensure quality renovation work while avoiding cost overruns.
- Examine each feature very carefully. Overly original concepts or infrequent improvements in a given market can have a negative impact on a home's resale potential. This is where the expertise of a real estate appraiser comes in. They can guide you thanks to informed and objective recommendations as to the market value of the property.
Most importantly, don't forget to select home insurance that suits the needs of your new property!