A question I often hear when working with my clients is what is the assessed value of the home? Especially right now in the Kamloops market; Buyers are often confused about why the the list prices of the houses for sale are more than the assessed value.
First its important to understand the three common terms that are often used, market value, assessed value and appraised value.
Market Value (also known as property value or fair market price value) is a consumer driven value determined by experts. Supply and demand plays a large part of the determined market value – because a property is worth what a Buyer is willing to pay in order to get it. When there are more Buyers than there are properties for sale, the price will rise because there is a larger demand. On the flip side, when there are more listings than available purchasers, the price will decrease. That is why when real estate is discussed in media and on the news; you typically hear “Buyer’s Market” or “Seller’s Market” which is just a simple way of summarizing supply and demand.
Assessed value is the determination of an exact number by BC Assessment’s professional appraisers. Appraisers look at the home’s condition, features, improvements, lot size, location, nearby sales and many other factors.
Appraised value is the value determined by independent appraisers that provide written reports for various purposes. As a result the appraiser must take into consideration what the report is for before determining a value.
What are the values for?
Market, appraised and assessed value are utilized in the dealings of residential homes and commercial property. Market value is used for determining the value of a home if sold in the current market; which is why his number can vary greatly from year to year. The assessed value is for tax purposes to determine the share of provincial and municipal property taxes that owners must pay. Appraised values are used for a variety of purposes; insurance, home loans, probate, accounting purposes etc.
Which Number is More Important?
All three values are important for varying reasons. One is not more important than the other, ultimately it depends on why the value is needed.
I am buying a house, why does my lender require an appraisal?
From time to time, a bank or lender will requires an appraisal when a Buyer is purchasing a home. This is done to gain a second opinion from an independent, outside party so the company lending the money is assured of the value of the property. The bank is lending their client thousands of dollars; they ultimately want to be sure that in the event that the client forecloses on the property that the value of the collateral (the property) covers the loan.
Have more questions? Feel free to reach out to me directly or comment below.
Curious what the market value of your home is? Head on over to my market value page to request your report.