Why A Comparative Market Analysis Is Different Than The Assessed Value Of A Home.
For most homeowners, a home’s value represents a huge chunk of their overall financial picture – their net worth, if you will. So it is important to know what the value of the homes is worth. But this is not that straightforward as a home is valued in different ways, the most common being market value and assessed value.
A comparative market analysis (CMA) can reveal a property’s fair price range but may not be as an accurate method as an appraisal done by a professional appraiser. It compares the property to others similar in location, size, and features (see below).
A CMA report is what a realtor will typically prepare for the client, and because the CMA is a price estimate, a real estate agent or broker does not need an appraiser’s license when presenting the analysis report. The estimated price can then be used for negotiating a sales price.
On the other hand, an assessed value is usually done for tax purposes. The assessed value takes into account any property improvements, replacement value of the home if it were destroyed, if there is any income derived from the property and the price of similar homes in the area.
In BC, the property assessment is administered by BC Assessment, a Crown corporation that operates under the Assessment Act. Its mandate is to provide an annual independent and uniform property assessment of all property in BC and is responsible for determining the market value and classification of all properties.
Assessed property values are a lagging indicator and are not the same as current market values because they are taken at a singular point in time, and do not reflect current market changes. July 1st is the market valuation date for the following year’s assessment and December 31st is the date notices are sent for the upcoming year.
For a homeowner, a lower assessed value is preferable to a higher one as this determines the amount of taxes to be paid – the higher the assessed value, the higher the property taxes and vice versa.
For the same homeowner, an increase in market value is advantageous, however, especially if the home was purchased several years ago. The advantage would be in terms of higher home equity, and this could be leveraged in many ways.
Factors in a CMA typically include:
- The address of the property
- Description of the property – floor plan, number of bedrooms and bathrooms
- Square footage of the property
- 3-5 comparables, including sales price, size, age, and features for each comparable
Factors in an assessment typically include:
- The location of the home
- The view from the home
- The size of the home
- The age of the home
- Garages, carports, decks, pool, etc.
It is always advisable to get a Comparative Market Analysis to ensure you get the most value for your home. Our real estate advisors are trained professionals who can ensure you get the best possible price for your home. Contact us by email or call us on 604 913 1000.