The actual value of the house is NOT the property assessed value
Many would be buyers are operating under the falsehood that a home’s offering price needs to be just above its tax assessed value. In other words, they understand that tax assessed is the same thing as “what a home is appraised.” This is certainly not the case, but just this month I’ve found no less than three potential buyers selling vancouver real estate who refused to offer anything higher than the tax assessment value on homes they truly loved.
To combat this (at least in the Vancouver bc real estate market), many representatives have begun featuring phrasing like “priced under assessed value” in their advertising materials for the home’s sale. This has not helped. Instead, what’s happening is that buyers’ preconceptions are seemingly validated and, thus, endorsed. Remax Vancouver agents say that “Shoppers see these homes as ‘good deals,’ but in truth they are not.” The ASSESSED VALUE is ascertained by the public tax professional. (In BC this is a provincial crown corporation referred to as BC Assessment.) The entire justification for the assessed price is to ascertain taxes; that is all. This value is recorded and combined with the tax rates of the area. This is different from the FAIR MARKET WORTH. Fair market value remains the price that a abode can bring on the open market. This is the price that educated, motivated, and willing buyers will extend to procure the property from a seller who is selling of their own free will. Fair Market Value is decided by comparing to comparable properties which have sold in the previous three to six months. (If no comparable homes are available, the time-frame may have to be expanded.) Based on these homes’ selling prices–these are called “comps”–the agents counsel the seller on a reasonable asking price. Following a price is arrived at between a buyer and seller, this becomes the fair market value of a particular property. Thus, it stands to reason that in advance of making an offer, a buyer must examine comps themselves to come to an understanding of what is reasonable and fair.