How to increase the value of your home in Canada
Owning a home isn't just about having a place to crash. It's an investment, a stepping stone to future wealth. So how do you ensure your home gains as much value as possible? We've got expert tips, straight from the Appraisal Institute of Canada!
What is a home appraisal?
A home appraisal is an independent and unbiased opinion on the value of your property, done by a professional appraiser. It helps determine how much your place would probably sell for if it were on the market. This can be useful for various reasons, such as buying or selling a home, refinancing your mortgage, or securing a home equity loan.
Remember, a home appraisal is different from a home inspection. While an appraisal determines the market value of your home, an inspection identifies potential problems, like structural or system defects, that could affect the home's value or livability in the future.
Having a professional appraisal of your home ensures that homeowners, potential buyers, and lenders have an accurate and fair understanding of your home's worth. It's a critical step in the home buying or selling process and a valuable tool for homeowners.
How is a home's value determined?
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.
Why have housing prices in Canada risen so drastically?
Unfortunately, the pandemic didn’t just affect Canadians’ 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? The value of homes in Canada rose by more than 26% in 2021, according to the Canadian Real Estate Association. With the pandemic behind us, we might see a cool off in house prices.
What should you consider when buying a home?
When buying a home, there are several key factors you should consider to help ensure your property will retain or increase its value over time:
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Location
Location is often touted as the most important factor in real estate, and for good reason. A home in a desirable area - close to amenities like schools, shopping, and transportation - will generally hold its value better than one in a less desirable location.
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Condition of the property
The current state of the property is a significant factor. A well-maintained home may save you repair costs down the line and could be worth more in the future. Consider the age of the home, the condition of major systems like the roof and HVAC, and whether the home has any structural issues.
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Future improvements
Think about potential improvements you could make to the property to increase its value. These could include cosmetic updates like painting and landscaping, or more substantial renovations like updating the kitchen or adding a bathroom.
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The neighborhood
Look at the neighborhood's growth and development trends. If the area is on the rise, it could increase the value of your home in the future. Check for signs of development like new schools, restaurants, or public transportation lines.
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Market trends
Keep an eye on the real estate market trends both locally and nationally. If home prices are generally increasing, it's a good sign that your property's value will grow over time.
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Size and layout
The home's size and layout can also impact its value. A home with more bedrooms or bathrooms, a modern open floor plan, or flexible spaces that can serve multiple purposes might be more desirable.
Remember, buying a home is a significant investment. While it's important to find a home you love and can see yourself living in, it's equally important to consider these factors to ensure your investment holds or increases its value over time!
What are the top five home improvements to boost your home's value?
Home is where the heart is, but it can also be a smart investment. If you want to increase your home's value and attract future buyers, here are the top five expert-approved upgrades:
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Kitchen renovation
The kitchen is often considered the heart of the home. Giving it a makeover can significantly increase your home's appeal. You don't have to go all out—a fresh coat of paint, new cabinet handles, or updated appliances can make a big difference.
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Bathroom upgrade
A bathroom renovation can also yield a good return on investment. Consider modern fixtures, improved lighting, or even a new vanity. Remember, a little can go a long way in creating a relaxing, spa-like atmosphere.
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A fresh coat of paint
Never underestimate the power of paint. Brightening up your home with a fresh coat of paint inside and out, preferably in neutral tones, can enhance its attractiveness and make it feel more spacious and clean.
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Décor updates
Outdated décor can be a turn-off to potential buyers. Consider updating old light fixtures, window treatments, or even doorknobs. These small changes can modernize your home and make it feel more inviting.
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Decluttering
An organized, clutter-free home is appealing to buyers, as it shows that the property is well-maintained. Regular decluttering can also help make your rooms appear larger and more open.
When it comes to renovations, keep in mind that improvements that are consistent with the value of your property and the market and done by professionals are usually a better investment. Each of these updates can help boost your home's value. Remember, the goal is to make improvements that will appeal to the broadest number of potential buyers, so keep it simple, tasteful, and in line with the overall style of your home. Happy renovating!
What are the best structural renovations to increase your home's long-term value?
If you're not afraid of a larger project and are looking to invest in your nest, consider these key structural renovations that can add substantial value to your home over time:
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Replacing the roof
Your roof protects your home from the elements, making it one of the most important structural elements. Replacing an old or damaged roof can not only increase your home's value but also prevent costly damage in the future. Plus, a new roof can enhance your home's curb appeal. -
Heating and cooling system upgrade
Upgrading your home's heating and cooling system to a more energy-efficient model can attract buyers looking for green and cost-saving features. Plus, it can save you money on energy bills in the meantime.
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Replacing windows and doors
Replacing old windows and doors can improve your home's energy efficiency, security, and aesthetic appeal. Choose modern, energy-efficient models to boost your home's value and appeal to environmentally conscious buyers.
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Electrical updates
Upgrading your home's electrical system, including the panel, wiring, sockets, and fixtures, is a smart move. It can increase your home's safety, functionality, and appeal to buyers, especially in older homes where the electrical system may not be up to current standards.
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Repairing structural defects
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Addressing any structural defects, such as cracks in the foundation or walls, can significantly increase your home's value. These repairs can be costly, but they're crucial. Ignoring them can lead to more serious and expensive problems in the future.
Remember, these renovations aren't just about increasing your home's resale value. They're also about improving the safety, efficiency, and comfort of your home while you live in it. So, while you're thinking about the long-term value, don't forget to consider the immediate benefits to you and your family!
Any more tips for taking on renovations?
- Permit please: Before you dive into your renovation, make sure you've got the green light from your local authorities. It might take a bit of time to get the right permits, but trust us, it's worth it. Not only will it make sure your reno is up to code, but it'll also save you from any headaches down the line.
- Call in the pros: It’s always a smart idea to use the services of a designer, architect or contractor. They can help transform your vision into a plan, guide you through the renovation process, and make sure the final result is as magical as you imagined it! Working with professionals can ensure quality renovation work while avoiding cost overruns.
- Keep it real: While it's fun to think outside the box, don't forget to think about what future buyers might like. If your improvements are too unique or not common in your area, it could make your home a tough sell. This is where the expertise of a real estate appraiser comes in. They'll give you objective advice on what will boost your home's market value.
Remember, a renovation is an exciting journey to make your home more "you." Keep these tips in mind, and you'll be set for a smooth and rewarding reno adventure!
What are the factors that can decrease the value of a property?
Ever wondered what might cause your home's value to dip? Here are some factors that could put a dent in your property's worth:
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Neglected maintenance
A home that isn't well maintained can lose value quickly. Ignoring small repairs can lead to big headaches down the line, and potential buyers might shy away from a home that needs lots of TLC.
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Outdated or poor-quality finishes
Retro can be cool, but not when it comes to your home's finishes. Outdated features like old wallpaper or popcorn ceilings can make buyers think twice, as they might see them as extra costs they'll have to cover.
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Structural problems
Structural issues like foundation cracks, roof leaks, or plumbing problems can significantly decrease a property's value. These are often expensive to fix and can be a major red flag for potential buyers.
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Location, location, location
While you can't pick up your home and move it, it's something to keep in mind when you're initially buying a property. Factors such as proximity to busy roads, industrial areas, or high crime rates can decrease a property's value.
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Market conditions
The real estate market can be a bit like a rollercoaster, going up and down. If there are more homes than buyers, prices can drop. Also, wider economic conditions, like interest rates and job markets, can sway home values.
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Neighbourhood nuisances
It's not just about your home, but the area around it too! Problematic neighbors or neighborhood issues such as high noise levels, poorly maintained homes, or frequent disturbances can also negatively affect a property's value.
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Lack of curb appeal
First impressions count! If your home doesn't have good curb appeal, it can decrease its attractiveness to potential buyers, reducing its value. A little landscaping and some exterior touch-ups can go a long way.
Remember, while these factors can bring down your home's value, don't let them scare you. Regular maintenance, timely updates, and a bit of TLC can help protect your home's value and might even boost it! After all, your home is not just a building, but a place full of memories and potential new beginnings.
Most importantly, don't forget to select home insurance that suits the needs of your new property! Learn more about how you can insure your home and protect it from water damage or a home burglary.
