Determining the value of a condo is generally easier than valuing a house because there are likely identical or nearly identical comparable sales in your building. In determining the value of a condo, real estate agents and appraisers will determine the price per square foot of recent sales and use that as a basis to determine the value of your condo. For example, a 750 sqft condo may be worth $600 psf (per square foot) or $450,000.
It’s important to note that:
- Diminishing psf returns on size – the bigger the condominium, the lower the cost per square foot (as the condo gets bigger, each square foot becomes less valuable as there are more of them)
- Height – the higher the floor, the higher the cost per square foot (buyers are willing to pay more for a condo on a higher floor)
- View – the better the view, the higher the cost per square foot (views can be extremely valuable, especially if they are of Lake Ontario or the CN Tower)
- Exposure (whether the unit faces south, north, east or west) will impact value
- Layouts – Buyers will pay more for layouts with more useable space rather than lots of hallways or a big foyer
- Corner units are worth more than non-corner units
How well the condo shows will also impact price, including how it is staged, how clean and clutter-free it is and whether it smells like the litter box or what you ate for dinner.
While comparable unit sales in your building are the most important consideration in valuing your condo, your real estate agent will also look at the units in your building currently for sale (ie the competition), as well as recent sales and competition in nearby similar buildings.
When it comes to condo pricing strategy, keep in mind that unlike Toronto houses, condos don’t generally get bidding wars and generally sell for at or below their asking price. There are 2 main reasons for this:
1- Supply and Demand – Because there are generally multiple units that are identical or near-identical in a building, Buyers don’t feel the desperation that they often feel with a house – if they miss out on buying this condo, there’ll likely be another similar one come on the market soon. In addition, the sheer volume of available condos means there are more to choose from.
2- Less Emotional Connection – We often see house Buyers fall in love, for example, with the original turn of the century stained glass windows, professional landscaped backyard or prime location of a particular house. With more similarities than differences, traditional condos don’t tend to create the same emotional reactions in Buyers. That doesn’t mean people don’t fall in love with condos – they do – but because Buyers know how much the same unit one floor above sold for, they aren’t apt to bid $100,000 over the price.
Other factors that will affect the price of your condo:
- Upgrades from the builder – while they won’t add as much value as you paid for them, they will help differentiate you from the other condos available for sale
- Renovations – don’t generally add much value to newer condos, but can add a lot of value in older condos
- Ceiling height – taller is better
- Maintenance fees – if maintenance fees are significantly higher than average, prices will generally be lower
- Parking – generally adds $25,000 $50,000 to the price of a downtown condo
- Locker or en-suite storage – definitely in high demand
- Outdoor space – balconies and terraces are in high demand
- Amenities in the building – while some Buyers don’t want the amenities because of the higher maintenance fees, others want the concierge/pool/theatre room/guest parking
- Location, location, location
- Ratio of Renters to Owners – Buyers prefer condo buildings where the majority of the people living there are owners
- Reputation of the building – the demographics of the residents, noise proofing, quality of construction, legal problems, effectiveness of the Board of Directors
If you’re wondering how much your Toronto condo is worth, send us an email or give us a call!