Home valuation in Canada: what it is and how to do one

A home valuation is an informed opinion of what a property is worth on a particular day. It is not a fixed number. The same house can have a different value depending on who is asking and why, and the answer is only as good as the information behind it.

The short version: the most dependable valuation compares your home with similar homes that sold recently nearby, then adjusts for the differences. You can do a reasonable version yourself, and professionals do a more formal one when a lender or a sale requires it.

What a valuation is, and what it is not

• A valuation is an opinion, not a price. The price is what a buyer actually pays, and it can land above or below the valuation depending on the market.
• It is tied to a date. A valuation made six months ago says little about today if the market has moved.
• The purpose matters. A lender wants the value it can safely lend against. A seller wants a likely sale price. An insurer wants the cost to rebuild, which is a different number altogether.

The main types of valuation

• Comparative market analysis (CMA): prepared by a real estate agent from recent sales of similar homes. It is usually free and is the normal basis for a listing price.
• Appraisal: a formal report by a licensed appraiser, usually ordered by a lender. For a typical home it costs roughly $300 to $600, and up to about $1,000 for large or complex properties. The lender usually passes the cost on to you.
• Property tax assessment: set by your province or municipality to calculate property tax. It reflects a past valuation date, so it often differs from today's market price.
• Online estimate: an automated figure from public data and statistics. It is quick and free but cannot see your renovations, condition or layout, so treat it as a rough guide. Our Property Calculator is one of these.

How to do a valuation yourself

1. Write down the facts about your home. Type (detached, semi, townhouse, condo), size, number of bedrooms and bathrooms, lot size, age, parking, basement and recent updates.
2. Find recent sold prices, not asking prices. An asking price is a hope. Look for homes of the same type that sold in the last three months, close by and of similar size. Ask an agent for sold data if you cannot find it yourself.
3. Pick three to six comparables. The closer they are to your home in type, size, age, condition and street, the better. Throw out a sale that looks unusual, such as a sale between relatives or a home in very poor condition.
4. Adjust for the differences. Note what is better or worse about each comparable. A renovated kitchen, a bigger lot, a finished basement or a quieter street each move the value up or down. Keep the adjustments modest and write down your reasons.
5. Turn the results into a range. For example, three similar homes sold for $790,000, $805,000 and $815,000. Yours has an updated bathroom but a smaller lot. A reasonable range might be $795,000 to $815,000. This is an illustration, not a real property.
6. Check it against other sources. Compare your range with your property tax assessment, an online estimate and the city's price trend on our home prices by city pages. If they are far apart, find out why before you rely on the number.
7. Allow for the market's direction. If prices have been rising or falling in your area since the comparables sold, move your range accordingly.

Common mistakes

• Using asking prices or listings that never sold.
• Comparing with homes that are much larger, much older or in a different area.
• Counting renovation costs as if each dollar adds a dollar of value. See renovations that add value.
• Relying on a single source, such as one online estimate.
• Forgetting that emotion and effort do not add value. Buyers pay for what they see.

When to get a professional

• Selling: ask two or three agents for a CMA and compare their reasoning, not only their numbers.
• Refinancing or a HELOC: your lender will order an appraisal, which you usually pay for.
• A dispute, estate or separation: a formal appraisal gives you a document that others will accept.
• Challenging your assessment: compare it with recent sales, and follow your province's process and deadlines.

How accurate can you expect to be?

A careful valuation based on good comparables is usually within a few percent, but a unique home, a market that is moving quickly or too few recent sales can widen the gap. Treat any valuation as a range.

What to do next

Start with the Property Calculator to get a quick reference estimate, then compare it with recent sold prices nearby. For the bigger picture, see What is my home worth?, how home prices are measured and what it costs to sell a home.

Sources: nesto: What is a home appraisal, LoansCanada: Guide to home appraisals in Canada.