How to assess the value of a home
By Jim Middlemiss • Bankrate.com

When it comes to buying or selling a home, one of the toughest things to do is determine how much it is worth.

Unlike the US, which has a slew of Web sites that let home buyers drill into the local market for detailed pricing information, the pickings in Canada are slim.

"There's no system like that (here)," says Don Lawby, the Vancouver-based president of Century 21 Real Estate, which has 5,500 agents selling homes nationwide.

"The reason is that in Canada, the listing continues to belong to the listing agent and broker. And generally speaking, they're placed on just a couple of Web sites -- the local real estate board and MLS," he says.

MLS is the Multiple Listing Service, and it's a great place to get a handle on sellers' expectations when it comes to home prices. The Canadian Real Estate Association operates the site, and Web surfers can access it for free.

Free house pricing information at your fingertips
The site presents a countrywide map that users can use to identify certain cities or regions. You can then zoom in to a zone and search for property by a range of criteria, such as price, type of property (single-family home, condo, etc.), number of bedrooms and number of washrooms. You can also search for special features, such as fireplaces or waterfront locations.

The site then displays a list of properties for sale that meet your criteria, from which you can learn more about the size of the rooms, the lot size and special features.

Besides MLS, there are also real estate company Web sites and sites run by local real estate boards that provide information about homes. To find real estate boards in your area, visit the CREA Web site.

Many of these sites provide the listing price for homes. What they won't tell you are the actual sales prices.

"Bear in mind that you get some wonky stuff," when it comes to listing prices, warns Diane Usher, area manager for Royal LePage Real Estate Services Ltd. in Toronto.

"What a property asks for is not necessarily what it sells for. It could be a little lower or substantially more."

Determining fair market value
Figuring out a home's market value takes a lot of science, a little bit of art and a hard head. The science consists of obtaining the prices of similar homes in the neighbourhood that have been sold recently.

The art entails comparing those homes to the one you want to sell or buy and determining how they are similar, how they differ and what makes the other homes more or less valuable.

The hard-headed part demands putting aside your emotions and arriving at a price the market will support, regardless of how you feel about the house or how much money has been put into it.

Diligent buyers or sellers can visit the local land registry office and do a search on a home to see what it recently sold for because once the sale closes, the price becomes a matter of public record and anyone can go in and look at it, says Usher.

However, she says it's a complex task and land registry listings are fairly generic statements that don't tell consumers much about the features of a home besides its selling price.

How a knowledgeable real estate agent can help
"What you really need is get yourself a Realtor and enter into a buyer agency agreement," says Lawby. "They will gather stats on properties to show you what the true value of a property is."

Usher says a real estate agent can "come in and do a presentation based on information of what a property is worth." It's not just recent sale prices that agents have access to; they look at intangibles and factors such as the quality of the neighborhood, size of the house and its design and use of space and its proximity to good schools. That's known in the industry as comparative market analysis or comps.

Usher says consumers need to ask agents to substantiate more than just the MLS stats. They need to identify other influencing factors, such as the presence of a group home in the area or whether a train goes by at midnight or if there are environmental issues in the neighbourhood.

That's why it's important for consumers to choose an agent who is familiar with their neighborhood of choice to help them establish a fair market value.

However, Usher warns, there's one stumbling block when it comes to comparables in Canada -- the new federal privacy legislation.

Because of it, agents can't advertise what a property sells for until the deal closes, at which point it becomes part of the public record. It could be a couple of months from the time the deal is signed to closing, and housing prices can rise or fall in that time.

As well, agents will go over a list of comparables with buyers or sellers, but they can't leave the information behind because it contains personal information of the current owners, which is protected by the legislation.

In arriving at an opinion on a home's market value, the gold standard is to hire a licensed appraiser, the best source of unbiased opinion about how much a house is worth.

Home values keep increasing
Of course, there are also a number of surveys by real estate firms, which can give home buyers and sellers an idea of general trends in the market.

For example, Royal LePage's recent quarterly report lists the average price of homes in key markets across the country. The news is good for sellers, but not as good for buyers.

In terms of Canada's main housing markets, 92 percent of detached bungalows increased in value, while 90 percent of two-storey homes rose in value.

Over the past year, the average price of a detached bungalow rose to $241,190, up 6.3 percent, while a standard two-storey home increased to $303,547, up 6.9 percent. Condominiums appreciated 5 percent to $172,072.

Usher says the market is "absolutely super. We've got a very, very strong economy here, which is what is influencing our activity level."

Jim Middlemiss is a freelance writer and lawyer based in Toronto. He's a frequent contributor to National Post, Investment Executive and Wall Street & Technology.