This often asked question “How much is my Comox Valley Home Worth?” has a fairly straight forward answer. Why then is it asked so many times and why is there so much confusion in the the worth of homes in the Comox Valley?
The most practical answer to this question is that your home is worth what someone is willing to pay for it. But, having said that, there are a number of things that may influence what someone is willing to pay for your home. Let’s look at a few of them.
There are a number of things out in the market place that attempt to place a value on your home. Some more common ones include:
1. Property Tax Assessments;
2. Mortgage Appraisals;
3. Real Estate Company Appraisals; and
4. Market Value.
First, property tax assessments are performed in British Columbia by the BC Assessment Authority for property tax purposes. The assessment authority states that for most properties the value is primarily based on real estate sales and market trends. However, the property tax assessment notice highlights important dates relative to this process. For 2015 assessments (received in January 2015) the assessment form states that the assessed value is estimated for most properties as of July 1, 2014 and that the assessed value reflects the property’s physical condition and permitted use as of October 31, 2014. Two comments:
1. The assessed value is already 6 months old when homeowners receive the assessment notice; and
2. How can the assessed value reflect the property’s physical condition (Oct 14) when the assessment is done in July and the assessor does not actually visit your home?
How many times has an assessor visited your home before doing a property tax assessment? Have you checked the database that they use to see if the statistical details on your home are even accurate? How many assessors are there for the thousands of homes that are assessed each year in your area? While property tax assessed values may come close to the market value of homes in some instances, they also may differ by a wide margin either above or below market value.
Second, mortgage appraisals done on a home by financial institutions are done as a means of protecting their investment in your home (the mortgage) over the longer term. An appraiser will provide a statement of the current value and possible future trends to the lender. Lending value for mortgage purposes is a long-term conservative estate of the value. Provided the value of the property exceeds the outstanding balance of the mortgage throughout the life of the debt, the lender’s investment is secure.
Third, there are generally any number of companies and individuals who may be called upon to do an appraisal on your home. These appraisals may use a variety of different methods to estimate value. According to the BC Property Assessment Appeal Board’s website, there are currently no legislated standards for real property appraisers but that most appraisers have some form of either provincial, national or international accreditation. So, it is important to check into the appraiser’s qualification and experience before having them do an appraisal. Also important is to understand the method of the appraisal along with its limitations and to confirm that the person doing the appraisal will actually be visiting your home or property as part of the process. Assuming that they produce an accurate assessment of value, the value is determined as of a specific date. If the market changes afterwards, then the appraisal becomes dated.
Clearly, each of the methods above have their limitations. They also are tied to specific dates and some are more dated than others. How accurate are each? It depends is the best answer. It depends on the person who did the assessment or appraisal. It depends on the reason for the appraisal. It depends on the method used for the appraisal. It depends on what factors were considered during the appraisal and it depends on whether or not the assessor or appraiser actually came to your home or property as part of the assessment or appraisal process. How close any or all are to the market value of your home depends on many factors. Without knowing all of them it is difficult to conclude much.
The most dependable way to determine market value is through a market value analysis done by a competent real estate agent. Real estate markets can and do change over time and so does market value. Just as with anything else in life, it is important to know several things about the market analysis. This type of analysis is supposed to represent what the market (not your real estate agent) says your home is worth. Market value is based on recent sales prices of similar homes in the same neighborhood. According to the Sauder School of Business, market value is defined as: “At any given time, the market value of an interest in land is the price it might reasonably be expected to realize when sold by a willing seller to a willing buyer after adequate time and exposure to the market.”
What constitutes market value is reasonably well defined. How market value is evaluated is not. Each real estate agent will have been taught how to statistically evaluate market value through some basic training. However, statistics are only a starting point. Knowing the market and “comparable home” and viewing the home before determining market value are all important. Real estate agents all have different levels of education, training, experience (as a real estate agent, as a professional, and in life) and competence.
Choosing a real estate agent to list your home and place it on the market at market value so that it will sell is a personal and important decision. Aim high for peace of mind. Contact Brett when you are ready to list your Comox Valley home for sale.