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Yesterday I blogged on the method BC Assessment values properties in BC.  I promised to do a follow up today.   Reading the title of this Blog you think I'm crazy, but I'll repeat it.    Should a Property Owner Request an Increase in BC Assessment Property Value?  Huh?  Yes, you read it right the second time as well.

The short answer is "No", but that's not the only answer.  If you let sleeping dogs lie, you will likely not have an increase in property taxes if you have made no significant changes to your property.   In fact, as newly built houses pop up with higher values in your neighbourhood, comparatively your value goes down as your house ages.    The only reason your property taxes would increase in this circumstance is if your city budget increases and the property tax percentage rate increases to meet the budget.  

Time to Plan when to sell your homeSo ... why on earth would anyone in their right financial mind request an increase in the assessed value and ultimately pay more property taxes?    There is one reason:  Your house is undervalued and you intend to sell it within the next year.   

Buyers will look for any reason to pay less than the listed price for your home.   In fact, they almost always pay attention to the most recent BC Assessment, and in my experience they have a really hard time paying over the assessed value.      

Time to Evaluate if your Home is worth more than the BC AssessmentI'm going to create a not too uncommon situation to illustrate how this could play out.   Jill's's home is assessed at $682,000, but realistically she is very confident that it would sell closer to $750,000.  This is not just her opinion, she's also had a realtor give her a CMA (comparative market analysis) at that price as well.   If you remember my blog from yesterday, the BC Assessment valuator rarely enters your home, so the realtor would have more tools for a proper valuation.    

Buyers and realtors both know that BC Assessments can be wrong.   Despite this knowledge, as a realtor I know first hand that buyers often really fixate on the assessed value.  They are justifiably scared that they are overpaying if the assessed price is lower than the list price.   So you see where I'm going with this?    A buyer, Jack, is now interested in the property in the above situation but is only comfortable going to $722,000.  Other buyers are also   spooked by the $40,000 discrepancy the BC assessed value.   Jack will go no higher, Jill will go no lower.  They are just too far apart and that deal dies.   

So, if in the scenario above, let's start over and Jill, knowing she intended to sell, successfully got their Property Assessment increased to a level closer to what the list price would be --- say new valuation of $738,000.   Jack, the potential buyers is now far more in his comfort zone.   After all, the BC Assessment is close to the list price. The Offer and Counter go smoothly and the the property ultimately sells for $746,000.    In this case, the buyer sold for $24,000 higher than above with the wrong assessment holding them back.   A home will sell for whatever the market dictates and the market is rarely wrong, if all parties are using accurate information.  

In the first scenario, the buyer did not get the property they desired and the seller did not get their fair price.  In the second scenario above, the deal closed at the market value, and the buyer and seller are both pleased.  Also, the buyer should be neutral to the fact that the BC Assessment was increased before the purchase because, the BC Assessors keep track of sales and their subsequent BC Assessment as new owners would have gone up anyway based on the sale price.  

Like George Peppard always said on the A-Team, "I love it when a plan comes together".

 

 

 

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BC Property AssessmentsFirst of all let me say "Happy 40th Anniversary" to BC Assessment.  Now I 'm not about to send them rubies but I am a little in awe of them this year.  It's their social media that's grabbed my attention.   They have Youtube, Linked In, Twitter and Facebook all linked to their website explaining their processes.  The technology "love in" doesn't stop there, the Property Assessment Notices now have QR codes (a code that can be scanned by a smart phone for quick information).   I must say I'm a little impressed with what traditionally has been considered a boring old crown corporation.   

Now, if you are a property owner in BC, you will have opened your mailbox this week to receive your 2014 property tax assessment.   Did you wonder how they arrived at their valuation of your property?  

Most often, a BC Assessment Appraiser does not actually enter your yard or home to value it.   They don't even drive by.  Despite this, less than 2% of assessments in BC are appealed.   Here's why.

BC Assessment has almost 300 Assessors that review the property location and view, lot size, home square footage, home age, and comparative recent sales in the neighbourhood as of July 1 of each year.  They also go further and compile information from land titles and building and reno permits.   They also send out self reporting questionnaires to property owners.   For those of you who feel compelled to fess up to a material improvement, BC Assessment would not otherwise know of, you don't have to wait to be selected randomly for a self reporting questionnaire, you can complete it online.   Part F is a comments section and you can tell BC Assessment everything you want them to know.

All the secondary information on changes in condition and material upgrades is factored in effective October 31.  In this era of online information, there is very little property information an Assessor cannot obtain from afar.   Once the value of your home is established, your property goes up and down (mostly up), just the same as Adam across the street, Neil next door, or Bal a block over.   

If your property value stayed the same, or went down, you likely breathed a sigh of relief and filed it away.   If you property value assessment went up, you likely had more thinking to do.   

Now I don't want to sound like I drink the BC Assessment Kool-Aid and just accept it.   In fact, my brother-in-law had his assessment spike several years in a row.   He appealed successfully.  He keeps me on the straight and narrow on accepting the BC Assessment valuations without question.   The erraticness of values in his neighborhood and stability of ours is an ongoing thorn in his side (which he good naturedly continues to imply BC Assessment favourtism towards our neighbourhood).  

The bottom line is that if you want to appeal your assessment, BC Assessment encourages you to speak to an Assessor first.  Do this, because if you go on to appeal, the information they provide will likely form part of your appeal.  Upon appeal, an Assessor will take a second look at the data, and may actually physcially view the property.   There is some risk that your assessment could actually go up, but that is unlikely if you have done your homework on comparative properties before submitting your appeal.   BC Assessment does provide EValueBC services so that you may compare your property value to your neighbourhood.

If you would like to Appeal your Assessment, the deadline for appeal is January 31, 2014 and there is an online form that you can complete and submit.

I have some thoughts on why you'd appeal to have the value increased .... more on this topic tomorrow. 

Mike Alleyne, Real Estate Agent
HomeLife Benchmark
604-785-7066

 

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