Home assessments demystified

This is a guest post by Greg Holmes, who is the realtor Will & I used to sell our Quayside condo a few years ago. We called him to get his opinion on our ginormous property tax increase. He kindly offered to share his response on the blog. – Briana

It’s a new year, and as a realtor, the beginning of January always comes with calls from past clients about questions regarding their property assessment.

It’s important to know that property assessment values are determined by appraisers based on market value at July 1, the previous year (so in the current assessment, it was July 1, 2009). Assessment values are not the same as current market values, since real estate, like any other investments, fluctuate over time. Summer 2009 home prices are no longer the same as today’s current market, especially considering the busy activity in the last few months.

As a general rule of thumb, when you are thinking about selling, you’d like to have your assessment value be as high as possible in order to get the highest dollar for your home. For instance, if a buyer is looking at two comparable places both priced at $500,000, and one place has a tax assessed value of $480,000, while the other is assessed at $430,000, then buyers usually perceive better value in the home assessed at $480,000. And don’t think buyers don’t know about the assessed value – in today’s internet age, it’s easier than ever for buyers to find this info, plus the buyers’ Realtor can easily provide it for them too. Now remember, we always tell our clients that this is only a guide as assessed value and current market value are different. After all, assessed values can be judged based on reasons not important to a buyer (ie- type of renovations, size of the lot, or location backing onto an industrial park, etc). Overall, there are many factors that get a home sold for higher…including, but not limited to, the age and condition of the home, the marketing plan to get it sold, and the assessed value.

For people not planning on moving in the near future, it’s a double-edged sword to see your property value increase. On one hand, it’s nice to see the home you bought so long ago continue to rise in value – it reassures people of a good investment. On the other hand, an increase in property value may mean an increase in property taxes, and since we already pay too much in taxes, nobody likes to pay more. In fact, a lot of people consider appealing their property assessment in hopes of decreasing the value so they can lessen their taxes. Don’t bother giving that as your explanation though since that’s not really a legitimate reason….just more of a complaint. Reasons such as extensive home renovations and changes in zoning regulations are more likely to get their attention.

If you’re considering an appeal, spend some time on the BC Assessment website at www.bcassessment.ca. It’s a fantastic resource and you’ll probably learn a lot about your neighbourhood’s property values. I’d recommend that you check your property’s value with that of similar homes on your street. Does yours seems significantly lower or higher than a comparable home? If you still have questions or concerns, the next step is to call the Assessment Authority and speak with an appraiser about your property. If you’re still not satisfied after speaking with an appraiser that’s when you begin the formal appeal process…all the details are explained on the website. On top of filling out the appeal form, you’ll need to provide a detailed explanation as to why you’re appealing. And a tip, you’ll need a better reason than “you don’t want to pay more in taxes”.

Remember, there is a deadline to appeal your property assessment. Appeals will only be accepted until February 1st, 2010 at 11:59pm PST.

Realtors Offer More Detail on The Onni Deal

greg_liz_gvis_worzThe recent announcement by the ONNI development company has generated a lot of interest, a lot of questions and confusion and a lot of traffic to our website here on Tenth to the Fraser. To help clear up the deal, we asked a Real Estate Agents and good friends of ours, Greg and Liz Holmes of MacDonald Olympic Realty to run through the deal and the opportunities here in New Westminster. Remember! Always consult your own professionals when making investment and real estate decisions. Tenth to the Fraser is not going to be responsible for your Darwin Award.

One option for that advice would be to pester Greg and Liz endlessly. Thier real estate chops and contact information can be found on their website www.holmesteam.ca.

Hi everyone,

Onni and MAC Marketing Solutions are doing a very unique event called the “Bulk Real Estate Liquidation Event.” More than $150 million portfolio of prime completed real estate located throughout the Lower Mainland will be sold, at prices far below market value. Each of the 375 properties has been substantially discounted for immediate sale during the event. These are brand new, beautifully-finished homes, set in prime locations, and are ready for occupancy. In New Westminster, Onni’s properties include The Point, a concrete high-rise located on Victoria Street near the New West Skytrain station, and Victoria Hill’s three projects (the Victoria Hill high rises, Nurses Lodge and The Grove). For details on the event, visit: www.onni.com/communities

These homes are from aggressive speculators who lined up overnight at launches to scoop up prime units and then couldn’t flip them before completion (you may remember watching the news with people lined up for hours to buy units). Many couldn’t afford to complete on the purchase and lost 15% deposits. So, much of the available inventory is made up of these homes. They are 375 completed, fully-warranted, brand new, never occupied homes featuring the latest finishings and amenities.

So how inexpensive will they be? These homes will sell under assessed values, current comparables, and independent market appraisals. They will sell at these lower prices because these homes are standing inventory and costing the developer strata fees, property taxes, capital carrying cost and other costs. Also, many of these homes have been partially paid for by the abandoned deposits of speculators.

For this discounted liquidation event, available units currently include:

The Point:

· 2 bedroom or 2 bedroom and a den (ranging from 980 – 1195 sf)

· 3 bedrooms with large balconies (appx 1590 sf)

Victoria Hill (high rises):

· 2 bedroom or 2 bedroom and a den (ranging from 1102 – 1236 sf)

Nurses Lodge (in Victoria Hill):

· 1 home remaining – a 936 sf 2 bedroom heritage home conversion

The Grove (in Victoria Hill):

· 1 bedroom (ranging from 645-650 sf)

· 2 bedroom or 2 bedroom and den (ranging from 870 – 1240 sf)

· 3 bedrooms (appx 1200 sf)

But there’s no guarantee that they’ll still be around when you go to look as the event is drawing big crowds and long lines.

So that is the deal, but what does it mean to you? Will the market punish you for a purchase made in 2009? Greg and Liz offer a broader picture and some context to the deal. Remember, don’t just go spending $5,000,000.00 because you read something here. Do your research and talk to an agent. Like Greg, or Liz for example.

So, is it a good deal? I’d say it is! I’m hearing that the discounts will be a minimum of 25% of the original purchase price, which means many units will be selling at about 2004 prices!

Still, many people say they want to wait to buy until the bottom of the market. Well, I’ve been taught that the best time to buy is just before the bottom because there are still great deals, there is less competition and plenty of inventory to give you options. As an aside, the best time to sell is just before the top, before everyone else floods the market with their homes for sale (which we saw in 2008).

This event should ensure all remaining units are sold. Even with shaky consumer confidence, buyers in BC are willing to make large purchases since the economy in BC is not as bad as other parts of the country. Onni wants these properties gone, so if something is still remaining, there’s a chance that they’ll offer even steeper discounts to sell them off (most likely any remaining units that are the least desirable will have the greater discount). And there are plenty of buyers out there…particularly first-time homebuyers who feel like they missed opportunities by waiting in the last few years. With discounted prices, it should make many buyers jump at the deal.

So, should you hold out for a single family home or buy a strata property (ie-condo or townhome)? Well, that really depends on your individual situation. Like it or not, trying to find an affordable single family home is still a huge challenge in Greater Vancouver. Even as the prices soften, detached houses are still out of reach for many, so condos and townhomes are very attractive options. When a real estate market softens, prices decrease across the board, so if the price of condos and townhomes go down, so do single family houses. However, the thing to remember is that it’s all relative. Lower-priced condos may only fall $10K -$30K, while house prices fall more like $50 – $70K, depending on the price of the homes, of course. So, if you currently own a condo or townhome, 2009 could be a great year to move up to a single family detached home.

When comparing opportunities like this liquidation event of new properties to homes on the re-sale MLS market, consider this. The average length that a homeowner lives in a property is about five years, generally speaking. So, many of the brand new developments simply don’t have as many re-sale units on the re-sale market since owners haven’t lived in them very long. That’s especially true if they bought in the last year or two, and now since they can’t sell their homes to make a profit, rather than turning a loss, many people are staying put, or renting the property, and have taken their homes off the market. Therefore, these discounted new properties by Onni draw even more interest since fewer of these new units are available in re-sale.

One of my favourite things about real estate is that everyone has an opinion about the market, and it always generates lively discussions and debates. Kinda like politics!

If you have any questions about this Onni event or real estate in general please don’t hesitate to ask. You can contact me through my website at www.holmesteam.ca.

Greg Holmes

Macdonald Realty Olympic

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