I get asked this question so often, I think it’s time to share this on my blog.
Why is there such a difference between the assesed value of this home and the price they are asking for it?
The assessed value of a home for property tax purposes does not co-relate to the market value for that home. The main reason for this is that the assessed values are about 18 months behind current posted sale prices. That is how long it takes BC assessment to update their values. That means in this rising market assessed values can be 15% (more or less) on average below current market values. The same things happens in a falling market only with the opposite effect with assessed value showing higher than sale prices.
The other thing about assessed values is that home owners have 30 days after they receive their assessment each year to appeal that assessment and some people do. They appeal their assessment for a variety of reasons. Some want to try and keep their taxes down as much as possible so they try to get the assessed value lowered. Others who are considering selling, will try to appeal their assessment to get the value up higher thinking that it will make their property seem more valuable. It’s quite a general misunderstanding. I looked into it because so many people ask and are confused about assessed values versus market values.
The result is that assessed values are all over the map and are not a good measure of the market value of a home. I proved this several times by running a comparison of recently sold properties comparing the sale price with the assessed value. If you look at the chart below you will see an example of what I mean. These sales from the last week (see chart below) show that the assessed value can be as much as $139,000 less than the sale price. I have seen previous examples where the difference was even much higher. Some listings in my list do not even show the assessed values because they are not relevant to the current market value.
Can you see how looking at assessed values provides little insight into the market value of a home and property?
Here is the actual definition of market value:
The most probable price (in terms of money) which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue influence
I hope this helps.
Please contact me any time if you have any questions.