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.
Think of the assessed value instead as something akin to a weather forecast, spanning far larger and more diverse areas than the unique ecosystem that is your neighbourhood, 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.
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. So, is this a Christmas present in July? OR is it?
Before, I explain the types of appraisal here are some fun facts you may or may not know;
- In BC, anybody can appeal anything. Keep this in mind that if you ever get in a dispute with your neighbor, appeal their assessment to get it increased!
- The total value of the roll in BC for 2017 increased 25% from 2016 to 1.68 trillion
- Despite this, only 1.36% of properties were appealed. This is consistent with previous years as annual appeal rates in BC are usually between 1% - 1.5%.
The Two Kinds of Appraisals
It is important to note that there are two kinds of professional appraisals. There is the marketing appraisal, such as one ordered by a seller. And there is the financing appraisal, which is done so the bank is satisfied the house is worth what the buyer and seller have agreed it’s worth. The financing appraisal is a less in depth review and more a matter of answering the question: Is this property worth the agreed-upon purchase/sale price?
A marketing appraisal goes deeper (and costs more), but a lender is not concerned with the actual market value over and above the purchase/sale price. A lender just wants the simple question answered. It is a rare day that the appraisal for financing has a value that differs significantly, if it all, from the sale price. Therefore one should not be surprised if, when buying a home, they find that the appraisal comes in bang on at the purchase price. As they do 99 per cent of the time. The one per cent of the time that the value is off, it is almost always a private transaction where the seller has had no professional guidance at all and has inadvertently set their price below market, by relying on something as inaccurate as their BC Assessment document.
In summary, rather than relying on your out-of-date BC Assessment for your home’s value, you should gather professional opinions from real estate agent(s) and an appraiser – these are the people with their feet on the ground and their heads in the game.