You’ll see both these terms, assessed value and market value used quite extensively when buying or selling property in Metro Vancouver.

If you’ve bought a home, every year BC Assessment will give you the assessed value of your home, which is then used to calculate how much the owner owes in property taxes.

When buying a home or selling a home, you’ll want to know the difference between these two values as it can affect both the real estate buying and selling process.

By the end of this article, you’ll clearly understand the differences, as well as how to determine a price to sell your home given these two types of home values.

Let’s dive in…

Table of Contents

What is an Assessed Value and how is it calculated?

The assessed value of the home is ultimately there to help the province of BC understand how much property taxes to charge the owners, as well as to determine ownership of that particular property.

Who is BC Assessment?

First, to better understand what the assessed value is, it’s important to understand what BC Assessment is, the branch determining these values across British Columbia.

BC Assessment is established as a crown corporation to determine the value of all real property in the province.

How are assessment values determined?

The assessment office and staff will look at several factors of the property, including:

  • Home prices in the comparable area
  • Location, size and square footage,
  • Property use and age,
  • Views from the home,
  • Attached buildings and structures like garages, decks, or other additions that require a permit from the city you live in…

Among other metrics and values that are added into various software and algorithms to arrive at assessment values for thousands of properties across many different municipalities.

In some instances, there are tax exemptions you may receive for a specific property, which will be dedicated against the calculated property taxes that are owed.

When you see the assessed value, that is the assessed value determined in July the year prior. For example, looking at your assessed value in January of 2022 is an estimated value for July 2021.

Interesting aspects of home assessment values

Where the assessed value gets interesting is that interior or exterior renovations that may increase property value are not incorporated into the assessment value. This is because the BC Assessment office does not use staff that go to each property. It’s based on a large data base, which is partly why the assessed value and market value can differ… More on that later.

Search and find property assessment values here at BC Assessment

How does this affect property taxes?

BC Assessment determines the assessed value at which properties will be taxed at. Then, provincial and municipal government tax authorities will apply a tax rate that is arrived at by determining the funds that will be needed to pay for public services.

How does this number affect an owner?

When your property is assessed at a higher value than previous years, this will cause an increase in property taxes owed to the provincial government.

However, if your new assessment is lower than previous years, you’ll have less property taxes to pay.

What is a Market Value and how is it calculated?

The market value is the value at which the real estate could be sold on the open market. This number is much more common to see in the home buying and selling process, especially in British Columbia, where market values are typically higher than assessed values.

Market value takes a considerable amount of other factors into decision that can include:

  • Local market comparables per square foot,
  • Home additions,
  • Inclusions if the property is sold,
  • Global real estate markets,
  • Proximity of transit (Hint, check out Walkscore for this),
  • Community,
  • Future developments in the area,
  • Home upgrades like an additional suite or electric car chargers, etc. ,
  • Contingency funds (if it’s a strata property),
  • Property inventories in the market,
  • Emotion behind why you’re selling,
  • And more…

There are so many factors to consider beyond this that your real estate agent can help with.

For example, if a home is listed for double its assessment value, there should be good reason for such a price. This could include interior or exterior improvements not accounted for in the BC assessment number, changes in the real estate market, newly proposed community developments in the area and more.

What’s the difference between the two?

Market value is used to determine what your home can be sold for on the open market.

For instance, if you and your neighbour had identical houses and properties, however, yours had extensive upgrades to the interior and finishings, the market value could be considerably higher than your neighbours. While still having the same assessed value based on the core components of the property like the square footage and attached buildings.

Similarly, these numbers will continue to have variances between the two

Determining what to list your home for

When determining what to list your home for, there are several factors to think about, such as the current assessed value (BC assessment), what the property is actually appraised as, neighbouring comparables for price per square foot and additions you’ve made to the property. Let’s review what this can all mean for you.

Appraised values

What is an appraised value? This is different than the assessment value as the appraised value is based off the determined value from a third-party professional. It’s different from the assessment value as it takes into consideration and property upgrades and changes that BC assessment may not be able to determine through software.

Getting your property appraised is a great way to get a starting point at what to list it for on the open market. It’s also a great tool as a buyer to determine the value you’re getting based on the listing price.

Appraised values are also important for the bank. They’ll want to know an appraised value if you’re buying and getting a mortgage, usually determined by a third-party they work with, to know the mortgage they are facilitating has low risk given the appraised value.

Neighbouring price per square foot

Understanding the comparables for price per square foot, based on the type of property compared to others in the area is another important factor in determining the listing price.

For instance, If the neighbourhood is selling at a minimum of $700 per square foot and the property you’re looking at buying or selling has significant upgrades, you can expect it to be listed over that $700 square foot comparable in the local neighbourhood.

Property Uniqueness

How unique the property can also dictate how much the home should be valued for. For instance, let’s say your children are up and coming athletes and you want a home that can help facilitate rest and training. And you find the perfect property that has enough space for backyard training simulations with an outdoor sports court, and is close to school.

This property is obviously unique and is fit for a very specific buyer. Thus, this property could potentially be listed and sold for well-above any asking price for a home in the neighbourhood, given its unique fit for a specific buyer.

Help in Finding What To List For

While the above may seem quite straightforward, it’s not easy to determine a price point where you’ll receive what you’re looking for as a seller, while also avoiding pricing the property too high, and leaving it sit on the market for a while.

That is where the team at Metro Vancouver Life can help you. Our real estate experts and area guides can help you determine the best price for your home based on both the market and assessed values, so you get the price you want, and have a stress-free real estate transaction.

Get in touch with us today for a free consultation on your home buying and selling needs. Phone us at 604-722-6630 or email us at info@metrovancouverlife.com with any of your questions.