Spring is right around the corner which means that we all got our tax in the mail already and our new 2019-2020-2021 municipal assessment is in. While some of you will be happy to see an increase in their property’s value, others might complain about a decreased assessment value.
No matter if you are on the market to buy or to sell a house, remember that there could be a significant difference between the municipality’s assessed value of a property and its market value. This is why assessments should never be considered as the sole reference if you are planning to sell, purchase or finance/refinance a property.
Municipal assessments are conducted every three years and are governed by the Municipal Taxation Act. They are based on construction type, year, size, and all kinds of other criteria.
Logically, and in a perfect world, the assessed value should be the same/or close to market value, right?
But most of the time, the price paid for a property and its real market value has nothing to do with the city’s assessment and it’s because of the market value.
Market value is based on the demand in a specific time frame.
Market value is calculated by doing a comparative market analysis which is based on comparable properties sold in the past year in the same demography area.
So please don’t think that buying a property under the city’s assessment necessarily means that you’ve made a great deal…nor does paying $100K above its assessment means that you have been ripped off.
So, here is my advice: seek the professional opinion of real estate brokers (who might decide to throw in the mix a professional appraiser) to get you more bang for your buck– these are the people who really know what is going on in the market
Until next time, take care!