Is the BC Assessment my Properties True Value?
By now, I would think that most people have received their 2020 property tax assessments and it is interesting to hear people’s views on what their properties have been assessed at.
The reality is the assessment value that you receive in the mail may not be accurate as to the market value of your home. To get that number you really need to reach out to your real estate agent or a property appraiser. The latter will cost you money as you’re engaging somebody to appraise your property for which you’ll have to pay but if you get a real estate agent, someone that you know and trust and that you will most probably deal with in the future that may be a better option. If you feel it is close to the value you may not want to go through the efforts involved in filing an appealing, although if you feel it is way out of line, it may be worth while to appeal.
How does this property assessment thing work?
Provincial and municipal governments (taxing authorities) pay for public services through property taxes, which are based on assessed value. BC Assessment determines the market value of properties and sends property owners a Property Assessment Notice.
What is the difference between assessed value and market value?
Essentially, assessed value is a valuation placed on a property by a public tax assessor for purposes of taxation. Fair Market Value, on the other hand, is the agreed upon price between a willing and informed buyer and seller under usual and ordinary circumstances. B.C. Assessment explains it as below:
“Assessed values reflect the physical condition and use of properties as of October 31. The assessed values are based on comparable markets sales on or about the previous July 1.
In determining the assessed value, and the property type (residential, commercial, industrial or institutional) our appraisers may give consideration to present use, location, original cost, replacement cost, revenue or rental value, selling price of the land and improvements and comparable land and improvements, economic and functional obsolescence and other circumstances affecting the value of the land and improvements.
Appraisers also consider a wide variety of physical factors such as size, age, quality and condition of the improvements (buildings) as well as location, availability of services, shape and topography of the land.
The supply of properties available for sale and demand from willing buyers affects the rate of change in market values. Market values typically increase during a seller’s market, where supply is low and demand is high. On the other hand, market values typically decrease during a buyer’s market, where supply is high, and demand is low. Market values are stable where supply and demand are balanced.
Changes to properties including new construction, renovations, property classification and eligibility for an exemption are also reflected on the annual property assessments.
Appraisers look to the market to determine the market value of a property. Only comparable sales within a market area that have similar potential uses are considered and analyzed.”
The reality is, BC Assessment does these “appraisals” on their computers and they don’t physically look at individual homes or properties as a bank appraiser will so you can see how the “ball park” values are arrived at and are often not reliable. These assessments really end up being neighbourhood averages. I looked at one a few days ago that went up 18% in 2017 then 23% in 2018, then 20% in 2019 and the 2020 assessment went up another 13%. In 2016 it was assessed at $240,000 and 2020 was $474,000 which has basically doubled in those few years. Unfortunately, it is an extremely run-down rental property so you can see the flaw in not actually being able to physically look at these properties.
One of the first things we do when we are asked to evaluate a property that someone is considering selling, is to look up the assessment and the history of that assessment and historical sales of that property. The next step is inspecting the property and evaluating sales in the area to see if there are close matches while determining the differences between sales and the client’s property to determine the value a buyer will pay comparing the clients home to sales and the other active listings that they will view at the same time. We offer suggestions to our clients concerning things they could do that may enhance the price they receive and that will positively improve the marketing of their property.
We have a comprehensive marketing plan that achieves consistent results and yields the best prices possibly for our clients which is why 70+ % of our business comes from past clients who also refer their family, friends and associates to us year after year.
If you are concerned about your assessment, wondering what the actual market value is of your property in today’s market, or are interested in selling, please feel free to contact us and we will let you know the true value based on market data that relates to your property.