Assessed Value vs. Market Value: Apples vs. Oranges
Every year people ask what their property assessments mean? The key thing to note: Assessed values are not a reflection of market value. Assessed vs. Market values are often like apples vs. oranges...totally different things. For many years, prices and assessed values have usually been going up. However assessed values still rarely coincided with market value. This year, most assessed values have gone down for detached properties, although condo assessments have gone up. Condo owners need to be aware that it is very unlikely the current values of their homes have gone up the same percentage as their assessments have as the market has shifted since the assessed values were determined. Condo prices are now heading down just as are detached prices.
Some of the recent media coverage suggests that one can use the assessed values as an indicator of what their homes are worth or at least how much the values have gone down. One thing that hasn't changed with the change in the market is that home owners cannot rely on assessments as anything other than an indicator of the value of their homes for tax purposes. Assessed values cannot be used as an indication of what a home would sell for! In most cases, particularly this year, there is a significant gap between what the assessed values are and what people will pay for a home. In the past, as the market was rising, the buyers would generally pay higher than the assessed value. Now, as the market falls, buyers are usually wanting to pay less each month than they would have paid the month before. Assessed values were determined 6 months ago and the market has
changed a lot since that time.
In many cases (not all), particularly in the higher priced neighbourhoods, homes are now selling below assessed value. In some cases, home owners may be able to successfully appeal their assessments if they are higher than market value. If you need assistance on an appeal, I may be able to help. In addition to being a realtor, I have practiced law for over 25 years, and the assessment process is not very complicated to navigate. When considering an appeal, the key question is “Is your home assessed at more than it is worth”? If not there is no point in appealing. Another key consideration is whether it makes sense to appeal. If you are planning to sell your home at any time in the not too distant future, I would advise against trying to get a lower assessed value. The additional tax paid is likely a lot less than what you might lose on your ultimate sale price if buyers look at your lower assessed value and assume it reflects the home value. The key thing to keep in mind, regardless of where you live and whether you live in a house or a condo, is that the assessed value and the market value (what a buyer will pay) of your home are likely very different...they can be apples vs. oranges.
If you would like a free evaluation of your home and an estimate of its likely market value, please contact me.
Happy New Year!
I hope to continue to be, More than Your Agent, Your Ally.
Patricia Houlihan LL.B, B.A