Border Lines

Many would be buyers are operating under the falsehood that a home’s purchase price needs to be just above its tax assessed value. In other words, they believe that tax assessed is the same thing as “what a home is appraised.” This is really not the case, but simply this month I’ve encountered 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 Realtors have begun including phrasing like “priced under assessed value” in their advertising materials for the home’s sale. Such has not helped. Instead, what’s occurring is that buyers’ preconceptions are seemingly validated and, thus, endorsed. Remax Vancouver agents say that “Shoppers see offered homes as ‘good deals,’ but in truth they are not.” The ASSESSED VALUE turns out to be ascertained by the public tax professional. (At BC this is a provincial crown corporation referred to as BC Assessment.) The entire purpose for the assessed value is to determine taxes; that is all. This value is taken and combined with the tax rates of the region. This is variant from the FAIR MARKET VALUE. Fair market value proves to be the price that a house can get on the open market. This is the price that educated, motivated, and willing buyers will offer to procure the property from a seller who is selling of their own free will. Fair Market Value is decided by comparison to like properties which have sold in the previous three to six months. (If no comparable homes are available, the time-line 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. After a price is arranged 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 should examine comps themselves to come to an understanding of what is reasonable and fair.

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