What does your Property Assessment mean?
Blog by Patricia Houlihan - Personal Real Estate Corporation | January 17th, 2013
This year, many property assessments have increased beyond what might have been expected. The market has slowed significantly so people expect lower assessments. I have a lot of people asking me how this could affect the sale price of their properties. The assessed value really just affects what you will pay in property taxes; it is not an accurate reflection of what your home is really worth, should it be sold. Some assessments will be too high; some too low...and most buyers know the assessed values are not a reliable indicator of what they should pay for a property.
The following is an explanation of the reasons why a BC government property assessment and a properly prepared market assessment of your home may be different. It explains the basics; if you have questions about your particular assessment and its accuracy or lack thereof, or if you have questions about appealing your assessment, please contact me. Assessments must be appealed by the end of January 2013.
There are two main reasons that property value does not equal market value: timing and information used to arrive at the value.
Timing: Property assessments are based on government estimates of the value of the home in the previous year as of July 1st. By the time you receive your property assessment it is already six months out of date. A REALTOR®'S market assessment is usually current within a few days.
Information used: Assessors value approximately 2 million properties every year. We sell more than 99% of REALTORS®* do but we still value fewer than 100 homes per year. We therefore have time to look at a house carefully; the assessor obviously cannot be familiar with 2 million houses, their renovations, street appeal, etc. They look at fundamentals like lot size and house age but are not able to factor in other important elements which may add (or detract) from the property's value. They use a mass appraisal system where a good REALTOR® will look at each home individually and will have been in not only the home they are valuing but also the other homes which they are comparing it to in order to determine likely market value.
Property Assessments seem to cause home owners a lot of frustration because often they will expect the assessment to reflect value or they expect their neighbour's home which is not as nice as theirs to be given a lower assessed value but that is not always the case. I tell my clients to ignore the assessed value except as an indicator of what may happen to their property taxes...AND if the assessed value is too high, appeal it UNLESS you plan to sell your home in the upcoming few years.
If you have questions about your home assessment, or more importantly about the market value of your home, please contact me.
*According to REBGV stats for 2012.