The actual value of the house is NOT the property assessed value
Many would be buyers are operating under the misnomer that a home’s buying price needs to be just above its tax assessed value. In other words, they believe that tax assessed is the identical thing as “what a home is appraised.” This is definitely not the case, but only this month I’ve met no less than three potential buyers selling vancouver real estate who refused to offer anything higher than the tax assessment value on homes they truly loved.
To refute this (at least in the Vancouver bc real estate market), many agents have begun featuring phrasing like “priced under assessed value” in their promotional materials for the home’s sale. This has not worked. Instead, what’s happening is that buyers’ misunderstandings are seemingly validated and, thus, continued. Remax Vancouver agents say that “Purchasers see these houses as ‘good deals,’ but in truth they are not.” The ASSESSED VALUE proves to be determined by the public tax collector. (At BC this is a provincial crown corporation termed as BC Assessment.) The entire reason for the assessed value is to determine taxes; that is all. This value is noted and combined with the tax levels of the locale. Such is differing from the FAIR MARKET WORTH. Fair market value proves to be the price that a home can fetch on the open market. This is the price that educated, motivated, and willing buyers will pay to procure the property from a seller who is selling of their own free will. Fair Market Value is decided by looking to similar properties which have sold in the previous three to six months. (If no comparable dwellings are available, the time-line may have to be expanded.) Based on these homes’ selling prices–these are called “comps”–the agents direct the seller on a fair asking price. Once a price is agreed upon between a buyer and seller, this becomes the fair market value of a particular property. Thus, it stands to reason that in advance of making an offer, a shopper could examine comps themselves to come to an understanding of what is reasonable and fair.
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