The only real value of your home is what a buyer and a seller shake hands on. But if you’re selling or buying a home—or paying taxes on one—you need a realistic dollar figure to work from.
And that is going to depend on whom you ask. Your home has different value to different people and institutions, and many percentage points can separate the assessed value from the price your home actually fetches on the market. (Isn’t that why you immediately suspect something’s very wrong with a house that’s being offered at below assessed value?)
Here’s a top-to-bottom look at who determines house prices and what they’re thinking.
$$$$Realtor: A Realtor’s job is to get top dollar for a home, so you’re likely to hear the highest valuation from this real estate professional. Realtors have access to MLS® statistics that aren’t available to the public: they know how long homes are taking to sell in your neighbourhood and how sold prices compare to asking prices. They’re also out there all the time, looking at properties, meeting the people at open houses and talking to other Realtors. With all that information, they’ll arrive at the highest price they think they’ll be able to get, considering comparable properties in your area and current market conditions.
$$$You: You love this place. You’ve got it fixed up the way you like it, and every inch of it has a memory attached. You’ve been doing your homework, reading Real Estate Weekly and checking out the listings on REW.ca and you have a price in mind that reflects not only what you think you can get, but also what you want to get in order to move to your next home.
$$The Bank: Lenders do not want an exaggerated value attached to a home because they might end up wearing it. They want a conservative valuation, so if the people who buy your home fail to pay their mortgage, the lenders will be able to get their money back. When an offer is accepted, in most cases the lenders send out an appraiser to look at the home and determine if it’s worth what the buyer and seller have agreed on. If the appraiser thinks it’s worth considerably less, the buyer has to look for other supporting financing, or the financing can fall through altogether. It can be hugely inconvenient if you’re the seller, and devastating if you’re the buyer.
$BC Assessment: Here’s the starting point. The most conservative valuation of your home comes from this self-supporting Crown Corporation. BC Assessment is in charge of attaching a dollar value to all of the 2 million properties in private hands throughout BC. It does this so that each municipality and taxing authority can collect property taxes based on a provincewide assessment standard.
This doesn’t mean that someone from BC Assessment will visit your home every year. While it has appraisers, it doesn’t have nearly enough for that. BC Assessment has a vast data bank which includes information from municipalities, the provincial government, the real estate boards and others.
Your property assessment is set on July 1 of the previous year and based on dozens of factors including:
- finished area
- lot size
- number of bedrooms and bathrooms
- condition and quality
- sundecks and patios
- outbuildings like sheds and garages
- traffic and noise
- neighbourhood amenities
When there are extreme market changes, the government has even stepped in to cap the assessment. It did so in 2009 when prices in some places fell by over $100,000 from 2008 highs.
Your assessment could also go up because of something you did, e.g., took out a building permit for an addition or substantial updating. By changing the size or the effective age of your house, you’ve made it more valuable.
So What Is My Home Worth?Contact Carmen @ 604-218-4846
to get a free home evaluation and to discuss all the factors in determining your Homes Worth!
Carmen Leal *Real Estate Services
Macdonald Realty Ltd.
* THE HIGHEST COMPLIMENT I CAN RECEIVE IS THE REFERRAL OF YOUR FRIEND, FAMILY, OR BUSINESS ASSOCIATE. THANK YOU KINDLY IN ADVANCE!
* Ask about my Referral Program!