Assessed Value and Market Value - Why the Difference?

The assessed value of a home as determined by BC Assessment can often be quite different from its market value - the price buyers are willing to pay for your home. When the market value is higher than the assessed value, homeowners are very happy. But when I do an evaluation and advise them that their home is likely going to sell for less than the assessed value they are confused and understandably disappointed and want to know how this can b...e.
Assessed values are a snapshot in time - dating back to market values for July 1 of the preceding year. The government is doing its best to value your home based upon what comparable homes in your area were selling for at that time. They factor in the age of your home, your lot size, and the unique characteristics of your home when calculating its value. If your home is newly constructed, then the market value and the assessed value are likely going to be very similar. If your home is very representative of homes in the area, there have been a number of sales to use for comparables, and the market has been fairly stable over the past year, your assessed value will also likely be close to the market value. However, if the market has changed significantly in the past year, this will be reflected in the price buyers are paying and it can be quite different from the assessed value. More typically, if your home has had a lot of renovations and is an older home, it will often sell for more than its assessed value. The assessment authority may be unaware of these "upgrades" and so they are valuing it as a depreciated asset and not factoring in the improvements that have been made Alternatively, if a home has not been maintained and is an older home, its value will be closer to the land value portion of the assessment and will sell for less than its assessed values. As you can see, there is a lot to consider when determining the market value of your home. If you want to know more about the value of your home, give me a call. I would be happy to help you!