Homebuyers frequently inquire with realtors about the BC Assessment value of homes as part of their research into home prices. In this article, we will elucidate the concept of BC assessment and outline the distinctions between BC assessed value and home appraisal for the purposes of sale and refinancing.
BC Assessment: Purpose and Definitions
BC Assessment is an autonomous entity entrusted with the responsibility of establishing consistent and uniform property assessments in B.C. in accordance with the Assessment Act.
The B.C. government relies on the assessed value to determine tax values for homes throughout B.C.
However, the BC assessed value may not necessarily reflect the true market value of homes from a real estate market perspective.
How BC Assessment Calculates Values
BC Assessment values homes in a batch fashion.
This means that, for the most part, there is no personal attention given to explore a specific property; instead, a blanket assessment matrix is applied to a particular location or property type. For example, multi-family buildings are assigned an acceptable capitalization rate, and the value is determined accordingly. Often, especially in strata buildings, we find two identical units assessed at different values.
It is important to note that the assessed value needs to be within a certain percentage deviation from the true market value, or it can be appealed.
Realtor's Assessment: How is it different
Appraisal conducted by a professional appraiser or a licensed Vancouver realtor differs in several aspects:
Firstly, there is a keen focus on intricate details, such as renovations, seasonality, other active listings who complete with the home, and market conditions within a specific season throughout the year.
Secondly, a method known as Comparative Market Analysis is commonly employed, which involves assessing similar homes that have recently been sold.
One of the major limitations of BC assessment is its timing. Not only is it conducted once a year, but it also lags behind published values. Assessments released at the beginning of the year are typically based on evaluations done in July of the previous year. In the Vancouver Real Estate market, this time gap is significant, allowing for potential value changes during that period.
Homebuyers Perception of BC Assessed Values by BC Assessment
Many home buyers in Greater Vancouver often consider the assessed value as an indicator to gauge in relation to the listing price and the offer price they should propose. This is a common mistake, as the discrepancy between the BC Assessment value and the actual sale price varies, sometimes by hundreds of thousands of dollars. Since the early 2000s, when property values increased across the region, it became more difficult to predict the extent of the gap in values.
As realtors, it is quite challenging to explain to homebuyers that there is no correlation matrix or set of multipliers that can be used to accurately forecast the final sale price, especially in multiple-offer situations when prices rise above the asking price.
What Is The Market Value of Your Home
True Vancouver home values, in the simplest terms, are determined by what willing and able buyers are willing to pay.
Realtors frequently employ the comparative market analysis method to establish the listing price. However, there exist various strategies for pricing homes. Recently, we have witnessed realtors pricing houses intentionally to generate multiple offers and drive the price up by more than five hundred thousand dollars above the asking price.
What buyers often overlook is that the sale price, even after a dramatic ‘above asking’ sale, represents the true market value of the home. The home would have sold for the same price, even if it had been listed well above the original asking price.
Method to determine Home values
The most commonly used method for pricing residential real estate by home appraisers and real estate professionals is Comparative Market Analysis. This method is accurate because it relies on genuine market data and reflects what actual buyers are willing to pay, utilizing the supply and demand market forces at their best.
Factors to Consider that affect Home values
Home values can be influenced by various variables, including:
1. Location within the neighborhood
2. Lane access
3. Neighboring properties and the aesthetic appeal of the street
4. Condition of the house
6. External factors such as interest rates and monetary policies
Typically, home sellers tend to overestimate the value of enhancing features and underestimate the impact of deterring factors. It is crucial to consult with an impartial realtor who can provide an accurate evaluation.
Benefits of a Realtor apprasial of home value
Realtors and home appraisers can contribute their knowledge and expertise while maintaining impartiality. Realtors possess access to historical data, market condition trends, and various research tools that aid in identifying the true market value of homes in B.C.
BC Assessment can serve as a benchmark to observe, but it should not be a significant consideration in the overall evaluation process. Its primary role is to aid taxation authorities in determining annual city taxes and revenues.
If you are contemplating selling your home or are in the market to purchase a new one, it’s advisable not to heavily rely on the BC assessed value figure. Instead, make your decision based on market data and seek professional advice.