Home Evaluations

by Darrin DeRoches June 2 - 8, 2011

I just love  when I get calls from clients wondering how much their home is worth. Last night, a client who bought five years ago, calls and asks me to do a Home Evaluation on their property.  My first questions is “are you ready to sell” and they standard answer is “no, but we are thinking about it.”  So I do the search, find the comparable, put it all in a neat little presentation and send it to them. They bought the property at $216,000 and my evaluation comes in around $239,000 to $245,000. A $20,000 increase in less than five years is pretty decent.      So I call them to discuss the evaluation.  We talk about the comparable and the one that sticks out is a house four doors down that just sold. The husband goes on that it sold for $240,000 and it has no garage and needed work.  Why then would theirs be worth only $245,000. We start to look at all the other comparable and start to discuss the difference and similarities and we keep coming back to price.  I explain we need to look at the one comparable four doors down and I agree with them that the house is very close in size and yes it needed some upgrades and we both agree their garage adds value. Once we narrow it down to this one comparable we take a closer look.     Again the husband points out it was up for over $240,000 and that he has upgraded his house with a driveway, flooring, paint and some new counters and tile. I have seen all the improvements and I ask him how much did it all cost?  After some back and forth we agree the upgrades over five years were about in the 10 to 12 thousand marks.  So it has taken about 15 minutes to go through all this, now it is time to explain why their house is worth only $245,000 maximum.     The house four doors down was up for over $240,000 but it sold for $227,000. So if we take ten grand for a the fix ups they have done over the years and add ten grand for a garage (all high numbers) then add it to the price it sold for it comes up to $247,000.  The price I told them would be the highest they would get.  It took a bit to sink in but they agreed their house is worth the $245,000 dollar range, but I had to ask why they thought their house was worth more? Their neighbour just renovated their kitchen and had an agent come in and do an evaluation and the agent said it would sell for $280,000.  The house is much larger, has a pool, brand new kitchen and the agent is trying to get their business so he most likely bumped it up so they would consider selling. Greed is good but reality is reality.  I am sure next year they will be ready to take their increase and upgrade their house. V                                 Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.