I come across this question on a day to day basis from my clients. They ask me, ‘my property has been valued by the Tax Assessment Authority at $800,000 so why do you believe my market value is $900,000?’, or, ‘...as a buyer why should I pay more than the tax assessment value when I make an offer...?’.
The reality is that there is a big difference between Market Value of real estate and the Tax Assessment Value. Tax Assessment values are ‘actual values for the purposes of taxation’.Tax Values are calculated by an appraiser who relies solely on statistics to make the appraisal. The statistics these appraisers use are based on square footage, lot size, number of bedrooms etc. Their appraisals are not based on other factors such as the state of the market, i.e. whether it is a buyers’ market or a seller’s market, they don’t take into account the motivation of the buyers and sellers, they don’t take into account the economic factors nor do they take into account the real estate inventory, desirability, condition of the home and so on.
So, now I hope you can see how there IS a big difference or can be a big difference between the Tax Assessment price and the market price. Real Estate is what economists call an ‘imperfect’ market. That is no one can actually say what a property is ‘worth’ at any given time. Appraisers do not even need to be licensed in BC. Your next door neighbour could call themselves an appraiser and give you an appraisal of what your home is worth.
When I as a Realtor appraise your home, or appraise a home you are going to buy, I take into account many other factors than the tax assessment appraisers do. Sure, one of the factors I take into account is indeed the tax assessment, but this is one isolated piece of the pie. Tax Assessment gives us an idea of what the value could be but that is all.
As an MBA graduate I pride myself on valuing homes with the greatest degree of accuracy that any Realtor can give. My statistical analyses go beyond what most Realtors can offer you. Research is one of the main skills that MBA graduates are taught.
If you would like me to value your home, or one that you are thinking of buying the please call me on +1 604.437.4277 or email me on info@MrSharp.com or if I am online I would be delighted to chat to you right now.