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Learn why market price and appraised value of your home often differ—and which number matters when selling, refinancing, or planning renovations. The post How muchLearn why market price and appraised value of your home often differ—and which number matters when selling, refinancing, or planning renovations. The post How much

How much is your home really worth?

Author: Moneysense

Source: Moneysense

2026/01/07 12:33

6 min read

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If you’re like most Canadians, your home is your biggest financial asset—so it can be confusing when the appraised value of your home doesn’t align with what your realtor suggests listing it for, or what a buyer is willing to pay.

That confusion comes down to two different measures: market price and appraised value. While they sound similar, they serve different purposes and can vary widely. Understanding the difference helps you make better decisions when selling, refinancing, renovating, or dealing with legal and tax matters.

Market price vs. appraised value

The market price of your home is what a buyer will pay for it today. It can shift quickly since it’s driven by factors such as:

Demand in the specific neighbourhood
Competing offers or bidding-war situations
Buyer emotions, urgency, and fear of missing out (FOMO)
Interest rates and affordability

In fast-moving markets like Toronto and Vancouver, the market price can change from week to week, or even sometimes day to day.

In contrast, appraised value is designed to be steady and defensible. It answers one key question: Based on recent evidence, what is this home worth in the current market? Rather than considering emotion or competition, an appraiser focuses on:

Recent nearby sales
Property size, layout, and condition
Number of bedrooms and bathrooms
Quality and relevance of renovations
Finishes and fitments of the property
Overall quality of workmanship
Neighbourhood trends
Lot size, zoning, and external influences
Basement finishes
Parking and/or garage

Banks, lawyers, courts, and the CRA rely on appraisals since they’re unbiased and consistent, even when market sentiment is volatile.

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Why don’t market and appraisal value always match?

It’s not uncommon for appraisals to come in lower (or occasionally higher) than the market price. Here are some of the most common reasons why.

1. Buyers don’t always make decisions based on logic

People fall in love with homes, they get attached, they get competitive, and they get tired of losing bidding wars. All of this can result in making an unrealistic offer on a property that doesn’t depict what’s actually happening in the market.

A buyer who’s fed up or emotionally invested might pay well above what recent sales support. An appraiser cannot use a one-off emotional purchase to justify the final value.

2. Appraisers steer past active listings

Homeowners often compare their home to what others are asking for down the street. But list prices are just that—prices that someone hopes to get. Some listings sell for less than list price, some sell for more, and some never sell at all.

Appraisers focus only on sold data because it reflects actual behaviour, not speculation.

3. Renovations don’t always add dollar-for-dollar value

This is one of the most common misunderstandings. You might spend $70,000 on a new kitchen, but the market might only value that upgrade at $25,000 to $40,000. Landscaping and high-end finishes often have even lower returns.

Appraisers measure value based on how the market reacts to upgrades, not how much they cost you.

4. Timing can shift value quickly

Values can change even within the same month based on what’s happening in the market and wider economy. For example, a rate announcement might push buyers in or out of the market, a sudden spike in listings could cool prices, or seasonal patterns (like a December lull or summer slowdown) could reduce activity.

Appraisers capture a snapshot of the market at a very specific moment.

5. Unique homes are difficult to compare

A one-of-a-kind home like a heritage property, custom build, or oversized lot might attract a buyer willing to pay a premium simply because they love it. But an appraiser must look at the broader market. If there aren’t many comparable sales, their valuation will naturally be more conservative.

6. Homeowners often overestimate their home’s value

This is completely understandable—you are emotionally attached to your home and online valuation tools or old sales prices can set unrealistic expectations. Appraisals strip out emotion and focus only on evidence.

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Which number matters more?

Whether the market price or appraisal value matters more depends on what you’re doing.

If you’re selling your home, the market price is what counts. Your list price may be different from the market price; the buyers will set the price through their offer(s).
If you’re refinancing or applying for a HELOC, the bank’s decision will be based on the appraised value.
If you’re dealing with divorce, estate work, capital gains, or taxes, appraisal value is the legally recognized number.
If you’re planning renovations, an appraisal consultation can help you focus on improvements that will actually increase the resale value of your home.

How to get a clearer picture of your home’s value

Following a few simple tips can go a long way to ensuring you have an accurate picture of what your home is really worth.

Look at recent sales, not asking prices
Focus your renovations on areas that offer the highest return on investment
Consider the time of year and interest rate environment
Get professional advice when planning major financial decisions

Realtors can help you estimate the market price of your home, while appraisers can help you determine value. Both perspectives are valuable for different reasons.

There isn’t just one number that defines what your home is worth

A buyer may pay a premium because they’re emotionally invested, a lender will rely on a stable, objective valuation, and a homeowner planning for the future needs clarity, not guesswork. When you understand how market price and appraisal value differ—and why both numbers exist—it becomes much easier to make confident, informed decisions about your home.

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