Assessing the situation
It always intrigues me how much value is put into BC Assessments opinion of market value on your home.
Like “average” that we discussed last week, the assessed value is a crude parameter in my opinion.
Given government budget cutbacks across the board in times of austerity, it likely isn’t going to get any better.
Assessed values are used by municipalities to set their mill rates to fund their budgets. Once they know the cumulative amount of “assessed value” in their community, they assess a charge per $1000 of assessed value to you, otherwise known as the mill rate.
BC assessment appraisers use July as the benchmark for the following years appraisals. The challenge becomes one of manpower. Their stated intent is to assess your home at market value as of July the previous year, so now they are working in July 2012 to give you an assessed value in 2013. They can’t do every home though and that is the biggest flaw in the system that creates an absolutely unfair situation for many homeowners and what is more, there is absolutely nothing you can do about it. Many streets and regions are left behind for years as BC Assessment catch up in another area of town.
What I am talking about is not a situation where your home is “over valued” by BC Assessment, but where it is overvalued compared to other homes in your region, situation or even street.
Take for example a street I have been looking at for some time. The homeowner called BC Assessment eleven years ago and said “I have a problem”. In the discussion, he explains that his home may be slightly over valued, however his concern was that relative to the remainder of the homes on his street, his home was very overvalued. BC Assessment replied that you cannot complain about another persons assessment only your own. So he indicated that his property was pretty close to market but his neighbours were very low compared to market. The Assessor again explained that there was nothing he could do.
Out of frustration, my friend explains that it is grossly unfair that he should have to pay a disproportionate amount of taxes on his street because his neighbours values were assessed differently.
The answer from BC Assessment was “There is nothing we can do about that, we don’t have enough people to update the other values, but we will get around to it eventually”. Sounds fair? Not really, not even close to fair and eleven years later nothing has changed. In fact on that same street, a home sold recently for $775,000 with an assessed value of $521,000 yet my friend has been marketing his house below assessed value without success! Many properties in his region are disproportionately lower on assessed value.
What is the solution? BC Assessment should pay less attention to “fair market value” which they find difficult to achieve now anyway, and more attention to equity of values across the board. The one example above is only one of many many examples where certain home owners are forced to pay a higher share of taxes because of “inequity of values”.
Don’t place too much emphasis on assessed value when you are buying or selling a home because there is a large variance. Instead, ask your REALTOR® to do a market comparison to see what is actually selling and at what values.
Read more The Accidental Journey articles
The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet presents its columns "as is" and does not warrant the contents.
- My final thoughts on real estate Dec 19
- Housing prices to skyrocket? Dec 12
- The secret to internet success Dec 5
- Don't stop dreaming! Nov 28
- The magic of thinking big Nov 14
- Lest We Forget Nov 7
- We can get on together Oct 24
- Keep it rubber side down Oct 17
(Click for RSS instructions.)