On the first week of the New Year, we often receive calls from friends and clients alike asking if
their property assessment is correct. Naturally, the people most interested in the values are
the people who are currently in the process of selling their home or buying a home at the
The British Columbia Assessment Authority has reported evaluation increases between 5-15 percent
across the Province. But home sellers know as a fact they aren’t able to sell for the high
dollars that were seen at the peak of the market in April 2022. And buyers are all now seeking
deals and are making low offers on the properties. Something here isn’t right.
Let’s just clarify what the Assessment is all about.
Your Municipality creates an annual budget to handle the expected expenses expected for
upkeep of infrastructure and services. But it needs to determine what your share of that
budget will be.
Dividing it up evenly by the number of homes in your municipality is inequitable since some
properties are larger and some are smaller. The smaller properties would pay more and the
bigger ones less.
The budget is divided by the total value of all properties in the Municipality as determined by
the BC Assessment Authority, thereby creating a Tax Rate or “mill rate”.
The assessment value of your own property is then multiplied by the Municipal Tax Rate and
your share of property taxes for the year is determined.
Buy how accurate is your assessment? The first question I ask is when was the last time an
assessor entered your home? Almost everyone says they have never had an assessor visit. This
is because the valuation is generally done digitally: there are 2.3+ million properties in British
Columbia and not enough staff to visit everyone- in fact, just a small sampling in the Province.
Those actual physical assessments are rare so values are simply determined by your purchase
price multiplied by the annual percentage gain/loss each year. The Assessment Authority itself
states that values are “bulk evaluations”. Simply put, it is really just a guess.
There are many attributes that aren’t factored into the assessment. Upgrades, décor,
configuration, proximity to specific amenities. Even small or basic “feel”. As a result, properties
almost always achieve a different result on the open market than what the Assessment states.
You receive your assessment in January, but the evaluation is based on what BCAA determined
the value to be the previous July. So it is data that’s already 6 months old. And as in the case
this year, the average house price was higher in July 2022 than it was in December/January.
I debate with a very good client often about the use of Assessment relative to a home’s value.
It is always interesting how homeowners want their value to be low while remaining in the
property and paying taxes, yet they want it high when they are selling because it looks better.
In most markets, buyers try to use assessed value as a pricing too. I’ll only pay assessed value
they’ll say when the list price and true market value are hundreds of thousands of dollars more.
Yet today, most assessments are higher than what the property is worth. Why won’t those
same buyers now use the assessed value to overpay for homes???
The bottom line is that the Assessed Value isn’t the true value. It’s a figure which is used by your
Municipality to determine your share of taxes for the year. That is it.
True market value is always defined as what a buyer is willing to pay and what a seller is willing
to accept in the same market period. Real Estate agents and appraisers are best equipped to
determine true value because they have often seen competing recent sales and can factor in all
those attributes I listed above.
I’m just waiting for real estate ads stating “Selling Below Assessed Value!!”. Yes, and water is