By Alisa Aragon-Lloyd, as seen in "New Home + Condo Guide" magazine, January 23, 2024
The price value indicated on your B.C. property assessment notice may not accurately reflect your home’s actual market value. The following will discuss the difference between the B.C. assessment value and the market value and the factors that influence these amounts.
What is the B.C. assessment?
The B.C. assessment notice is used by tax authorities to establish property ownership as a foundation for real property taxation, and involves the classification and estimation of a property’s value through a third-party assessor. The values are determined in July of the previous year, meaning the assessed value received in January 2024 is based on the estimated value from July 2023.
How is the B.C. assessment value calculated?
The primary purpose of a B.C. assessment is to facilitate the taxation of a property by the government. However, homeowners often focus on the assessed value. Appraisers seldom conduct in-person visits; they rely instead on online data. Key factors that influence an assessed value include the home’s location, view size, lot size, age, and additional features such as carports and decks. It is important to note that the assessment is based on the perceived value as of July 1 of the previous year, rendering it more than six months outdated.
How is market value determined?
Market value encompasses various factors that influence what a buyer is willing to pay for a property and what a seller is willing to accept. Unlike assessed value, market value is influenced by real-time considerations, such as interior layout preferences, location proximity to transit, the age of the property, renovations, upgrades, maintenance and the current trends in the real estate market. Recent comparable sales, effective marketing by realtors, buyer emotions, and other dynamic elements also contribute to determining a home’s market value.
Why is the market value of a property important?
If you are looking for a more accurate representation of your property’s value, a market appraisal is essential. This is particularly useful when selling, buying, refinancing a mortgage, or obtaining property insurance.
What are the benefits of an appraisal?
A real estate appraiser will be able to provide you with an accurate indication of your property’s market value, which can be helpful if you are looking at doing the following:
When buying, including an appraisal as part of your conditions can protect you against any potential problems affecting the sale price and you can get out of the sale if you choose to do so.
When selling, an appraisal can provide a realistic indication of your asking price, so you are not going with unrealistic expectations. You avoid having your property sit on the market for a long time.
A lender and financial institutions will request an appraisal, which will ensure the borrower is not over-borrowing when buying or refinancing a property.
The major differences between assessed value and the market value
Physical presence versus an online assessment: A buyer physically visits the home and is able to obtain a comprehensive view of the property, while an assessment appraisal lacks the physical presence of the property.
Factors considered: The market value considers a broader range of factors, allowing for a more accurate representation of a home’s value.
Timing and real-time evaluation: B.C. assessment occurs once a year on July 1 of the previous year, leading to a time lag. In contrast, market value is assessed in real-time, reflecting current market conditions.
Implications and recommendations to consider
Discrepancies between assessed and market values are common. B.C. assessments, while serving taxation purposes, may not accurately reflect a property’s current market value. To truly understand what your home could sell for, it is recommended that you consult a real estate agent for a personalized tour and market evaluation. A real estate agent considers a multitude of factors, providing an estimate of the market value aligned with current real estate goals.
Recognizing the nuanced differences between assessed value and market value is essential for you as a homeowner or as a prospective buyer to navigate the intricacies of the B.C. real estate market.