Everyone just got their tax assessments in the mail and surprise surprise, many people’s home values went down. In some cases, they went down a lot!!! As Realtors we see the trap of the Tax Assessments all the time as a determination of true value from consumers. However, Tax Assessments are typically so far behind the market they don’t truly reflect actual value by the time you get them in your mailbox on December 31.
To understand why tax assessments don’t reflect true values, let’s go through the process BC Assessment goes through to do your tax assessments. First, the appraisers who work with BC Assessment will be valuing more than 2 million properties throughout the province. They need ample time to go through and ensure the values they are placing on each property are accurate at the time the valuations are due. Valuations are due on July 1. This gives them 6 months to finalize and review all the valuations they came up with to ensure accuracy in the market.
With the Valuations done on July 1, this gives 6 months for the markets to change. Either up, down or neutral. In markets like the Greater Vancouver Area, this can be a long time for significant changes in the market place to happen. In the last 3 years, we have seen two completely different markets. First was a market that was going up extremely fast, so tax assessments that were sent out were well behind the going value of the homes. Buyers who relied on those Tax Assessments found themselves in a losing position on every bid they made on a home and we saw values rise very fast. Then we saw the market turn around and slowed right down after significant government intervention. The tax assessments were completed prior to things slowing down, which meant the values were much higher than the actual value properties were selling at. This is when Sellers got caught with their proverbial hands in the cookie jar. Sellers were set to get the values on the last tax notices, but in many cases, the sales were coming in significantly below those values. Now as we enter a more balanced market and with notices just coming out, we are finding that they are a bit all over the map.
Understanding that the Tax Assessment Values are done 6 months in advance of the date they are sent out can give you as a Seller or Buyer in the market and advantage if you understand this fact and rely on the proper market and sales data that are current for the type of property you are looking at. If you look at proper Comparable Properties you can properly place your home for sale and get a buyer in the quickest amount of time. If you are holding out of a value that was determined in the past, you are setting yourself up to lose more value as time moves on.
The next time you are looking to buy or sell in a market, keep in mind that your REALTOR(R) will be using the same method of valuing your property that BC Assessment does do, however they will be using the most up to date sales data to ensure you get the most amount of money from your sale in the least amount time that the market will bear.