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.