Assessors are supposed to base evaluations on comparable sales from the prior year.
The reality is they can’t get around to every house, they usually don’t go inside any house, and there aren’t usually enough comparable sales in the immediate neighbourhood at that specific time required.
As far as market value goes, it doesn’t matter. Properties have sold $100,000+ over the assessed value and the same amount under.
Looking at various blocks of time for residential sales in 2011 here are the statistics from the Vancouver Island Real Estate Board:
April: 91 sales – 67 per cent sold above the BC Assessment.
August: 55 sales – 62 per cent sold above the BC Assessment.
December: 38 sales – 54 per cent sold above the BC Assessment.
There was no obvious correlation between area, style or price range though a higher number of newer (three years or less) homes sold during the times when there were a higher number of sales over BC Assessment and most of those were newer. Take out those newer homes and the percentages are very close year round. Clear as mud?
In other words, time of year doesn’t affect list to sell ratios in terms of how close to the assessed value the house will sell for.
What affects market values?
From a realtor’s perspective, market value is the amount a house will sell for given an arm’s-length transaction between what a seller will sell for and a buyer will pay.
The market determines a home’s value — supply and demand. If there is a ready, willing, able buyer in the market place and they are looking at your home, what are their other options?
This doesn’t just mean what other homes are out there that are like yours. It means, might they consider building a new home; renovating an older home; going into a patio home instead of townhouse?
If there are several homes that are similar to yours, it’s much easier to determine where your home fits. You want to be ahead of your top three competition.
It’s always a good idea to put your ‘Buyer Hat’ on when looking at what’s available. If you were the buyer, be honest with yourself; which one would you pick?
Even if yours tops the charts, just how much more would you be willing to pay for it? Let’s face it, if that number is higher than what any buyer in the market is willing to pay — you’re essentially buying your own house back by not selling it for less!
Comparable sales are another area to consider but they are really secondary to listings. Buyers can’t buy the ones that have sold.
Sales do tell us how active the sector of the market it. It tells us what others have been willing to pay for what they’ve got. If you’re fairly priced according to your competition but the only similar homes have sold for significantly less, the market could be stagnant in that upper range you’re in.
And a lot of sellers are surprised at how much (or more accurately how much less) their neighbour down the street actually sold for.
Unique properties require more analysis than a typical family home and often the competition can vary greatly because of that. Here’s where you can test the market. The right buyer may come along at the price you want but will it be within the time frame you want.
Case in point: I remember a waterfront property in Campbell River that took over ten years to sell. Silly realtor — working for 10 cents an hour on that one — guess that makes up for the ‘good’ years.
For more about BC Assessments, visit www.bcassessments.ca.
Anna Jorgensen is with Royal LePage in the Comox Valley.