The dollar figure on your provincial property assessment notice should not be taken as your home’s market value.
BC Assessment notices have arrived in the mail, giving some homeowners a big smile and a bit more spring in their step (increased property taxes aside), while others wilt and lament at a modest gain or decrease in assessed value.
But neither this assessment document, nor either parties’ emotions, are tied to a current true market value. In fact, provincial property assessments can be significantly too high or too low. Values are determined in July of the previous year, and properties are rarely visited in person by provincial appraisers.
For this reason, provincial property assessments should never be solely relied upon as any sort of relevant indicator of true market value for the purposes of purchase, sale or financing.
Think of the assessed value instead as something similar to a weather forecast, spanning far larger and more diverse areas than the unique ecosystem that is your neighborhood, your specific street, or your specific property. A weather forecast made the previous July, not the previous week. As this is when assessed values are locked in, a full six months prior to the notices being mailed out.
The BC Assessment Authority does offer some useful tools for a high-level view of the market. Go to BC Assessment and start typing an address. You’ll get a drop-down window where you can click on the address you want.
What’s My Home Really Worth?
Usually, market value is determined by what a buyer is willing to pay for a home, and what the seller is willing to accept.
A quick survey of recent sales and their relation to assessed values will often demonstrate no clear relationship between sale price and assessed value. It’s often all over the map. Some properties selling well below assessment, and others well above.
You also want an experienced local Realtor to help you determine the selling price of your home. A local agent will have a far better handle on what is happening in your area for prices than does a government document, and in many instances will save you from yourself.
In theory, a comprehensive current market review completed by a real estate agent should not differ radically from the value determined by a professional appraiser.
Professional appraisers spend all day every day appraising properties, and their reports are often seen as less biased. Imagine your reaction, as a buyer, to the following statements…
- The seller says their house is worth $500,000.
- The sellers’ listing agent says it’s worth $500,000.
- This house is listed at $500,000 based on a professional (marketing) appraisal.
Most buyers would consider #3 the most reliable of the above statements. And most buyers requiring financing will have the benefit of the lender ordering their own independent appraisal to confirm fair market value. Sellers rarely order an appraisal in advance, which can create some interesting situations.
In practice, agents are relied upon for listing price estimates. Most buyers don’t care much about what anybody else thinks the house is worth. Buyers care what they think it is worth. This is why we say that market value is ultimately determined by what a buyer is willing to pay for the home, aligned with what is acceptable to the seller.