Estimated market value and tax assessement value: the key difference
In the previous 30 days, three different prospective buyers have indicated to me that they do not think to pay a lot more than the tax value given to the property. Why is this? Let me attempt to answer this question as best as a Vancouver real estate agent could: People apparently think that the price that is assessed for tax reasons is the same as what the house is actually worth.
Due to this mistake, real estate agents have commenced to include phrases like “price is below the assessed value” in their listings. We at REMAX Vancouver have not fallen to that schema althought I have seen a few… Heeding these statements, houses that are priced lower than the assessed value are seen as bargains. Unfortunately, this may not always be correct.
The assessed value of a home is an amount that is determined by a tax official (British Columbia uses a provincial crown company known as Vancouver BC real estate Assessment) in order to calculate taxes. Once this assessment is figured out, the entity responsible for taxation, including the City of Vancouver, then sets its tax rates according to the assessment.
Fair market value represents the price that an intelligent, free-thinking, and agreeable party would consider paying to the person who owns the property, who is not required to sell the house if he or she does not want to. Prior to putting a house up for sale, a real estate representative is going to track down several houses that are similar to that of the seller that have sold in the past few months. Factoring in these comparisons, the representative shall then advise the owner on what the price of the house must be. When a buyer and seller agree on a purchase price, this determines the fair market price of the house. This illustrates the reasons why you have to compare similar houses’ selling prices before informing the owner what you’ll pay. This shall ensure you know that the house is priced accurately.