In our industry, BC Assessments is always a topic of conversation. Mainly about how it relates to the actual value of home prices in our area and if it can be used to accurately assess current market value.
This resource is not intended to speak poorly about the BC Assessment process, but rather to give a realistic understanding of how it’s used in the real estate industry.
Assessed Value
The assessed value is used by the government to show what your home is worth and what your property taxes will be.
They break it down into two sections: land and building.
BC Assessment is responsible for assessing over 2 million properties in British Columbia each year. With this many properties, and taking time and resources into account, it’s simply not possible to accurately appraise each home.
How BC Assessment Conducts Annual Property Assessments
The way BC Assessment streamlines this process is by collecting information, analyzing said information and then delivering the assessment notices for the new year.
The information used is gathered and reviewed throughout the year with the valuation date occurring on July 1.
Homeowners receive their assessment in early January, however, that number is from the summer—so you can see the problems already.
BC Assessment gets their valuation from a variety of sources such as building permits, land title offices, recent real estate transactions of your home and the surrounding area, and ariel/street imagery, primarily Google Maps. There are limitations to these tools.
Building Permits
The reality is, it’s extremely common for homeowners to complete work on their home without obtaining the relative permits.
This is due to the cost and time it takes to obtain permits, often delaying their preferred start date for the project.
It is worth noting that failure to obtain permits does not necessarily reflect poor workmanship, as work completed by qualified professionals will still be in alignment with current building codes.
Tip: Homeowners are legally required to disclose if work has been done without permits during a sale, so if you do see that, ensure you obtain a thorough inspection from a qualified inspector to verify that the work has been done to code.
If homeowners have done a large reno without permits or have updated the home throughout the years with renovations that do not require permits—such as a new kitchen or bathroom that doesn’t alter the plumbing, new flooring, or more—BC Assessment is not aware of these upgrades and it will not be reflected in the assessment of that property.
Real Estate Transactions
As mentioned above, the assessed value received in January is based on the value of the property from July 1 the previous year, so there’s already a time lag.
In addition to this, BC Assessment only uses transactions that have closed, so anything that’s currently pending—subjects have been removed, deposits are in, just waiting for completion date—would not be considered, which could have an impact on the accuracy of the assessment.
Google Maps and Imagery
Google Maps and other imagery is more of a last-ditch effort, and not a big factor in home assessments, although it may be utilized in certain circumstances. There is not enough access to up-to-date imagery for this to be a reliable tool.
Assessed Value and Property Taxes
In the last few years, assessments have been all over the place, some jumping up 30% and some dropping 15% in one year.
One of the biggest questions we get asked when we see these large movements is, “how is this going to affect my property taxes?”
Your taxes do not move in direct correlation to your assessment—if you jump up 20%, your taxes won’t increase by 20%.
You will notice a change in your taxes if the change in your assessed value is different from the average change in your area.
When you get your assessment notice, it will tell you what your increase was vs. what the average increase in your area was. If you increased by 20% while your area only increased by 10%, which may be the case if you got permitted work done, then yes you would see an increase in your taxes; however, even then, it wouldn’t necessarily be a 10% increase.
Assessed Value and Estimated Market Value
Assessments are a good starting off point, but we can’t confidently rely on assessed value without digging further.
When we conduct a comparative market analysis (CMA), or home valuation, one of the more effective ways for us to use assessed value is looking at what the average sale price to assessed value number is in your area.
If all the comparable properties in your area are selling for 10% more than their assessed value, then we can use that in our report.
This is important to understand when navigating the market as a buyer. It’s not uncommon to see properties offered at a price that varies considerably from their assessed value.
At the end of the day, it is our job as your real estate agent to be knowledgeable and up to date with current market trends to help you make the informed decision that’s right for your family.
Next Steps?
Homeowners: Contact us for a free, no-obligation home equity check to gain a deeper understanding of your position in the market.
Buyers: We’re here to help, no matter what stage you’re at, to determine the most effective pathway towards achieving your real estate goals.
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With gratitude,
Alex Hughes* and Ricki-Lee Jewell, Victoria, BC Real Estate Agents
*Personal Real Estate Corporation
