It's that time of year again, when British Columbians start receiving their property assessments, courtesy of BC Assessments. It's reasonable, then, to see a valuation of your property and ponder whether it captures what you'd get if you listed your home for sale.
But if you bring this idea up to a realtor, they'd more than likely advise against listing your abode (if the sole motivator was your property assessment), and there are a few reasons why.
The first thing to know is that while the assessments are an attempt to capture market value, they are dated back to July 1 of the previous year -- six months prior to January, when BC Assessment typically mails them out.
A lot can happen in six months, in any industry or market, but especially in real estate. As just one example, on July 1 of 2022, the Bank of Canada's policy interest rate was 1.50%. Since, it's nearly tripled to 4.25% (with more increases expected to come).
That's a big change in the market environment, without even factoring in inflation, or market conditions specific to where you live, or market trends particular to your property type.
READ: Will BC’s Strata Rental Changes Impact The Market? Here’s What to Know
The second thing to know is that the primary audience for these assessments is really taxation jurisdictions, not property owners. In the words of BC Assessment: "BC Assessment provides a stable base for property taxation in British Columbia."
BC Assessment takes into account numerous characteristics of your property, but -- as homeowners would know -- they're not going address to address, knocking on doors. It's more of a broad-strokes kind of assessment.
"Their criteria is pretty objective," explains Christine Ryan, a Vancouver Island-based Sales Manager at Sotheby’s International Realty Canada. "But in reality, people buy homes, not houses. It's often emotional."
Ryan says it's fairly common for clients to bring up their property assessments, particularly this time of year. While most realtors do look at them, they almost always advise against giving them much weight -- and they definitely don't cite the assessed value during a sale.
It would be easy if there was a known and consistent margin of error between the BC Assessment valuation and the market valuation -- your actual market value is 5% higher than the BC Assessment valuation, for example -- but unfortunately that isn't the case.
"Price points are never fixed," Ryan says. As an example, she points to a property with an assessed value of under $800,000 that sold for $1.35M.
Ryan says none of this is to knock BC Assessment -- she explains that it's more of a misunderstanding by the general public on an assessment's intent.
She does acknowledge, however, that the assessments could potentially be more accurate for condominium buildings, as there would be a deeper history of transactions and the properties would be more similar -- two important factors for BC Assessment valuations -- than when comparing two single-detached homes in the same neighbourhood.
Nonetheless, she says, it can be "heart-breaking" to be the bearer of bad news and tell clients that their assessment may not be accurate. "You would much rather give support, or deliver good news."
Indeed, if you're a seller, this discrepancy has the potential to disappoint, or to lead to pleasant surprise -- but you'll only know for sure when you speak to a realtor.
This article was produced in partnership with STOREYS Custom Studio.
