One question that is often on homeowners’ minds is “What is the value of my home”? There are often many different opinions when it comes to a homes value. From a bank appraisal, the city assessment, and the true market value, all of which can vary. Homeowners are familiar with the city assessed value of their home as they are updated on this value every year. Although this is the most common it is not a great reflection of the true market value of what your home can sell for on the open market and here is why.
How the city assesses the value of your home
First let’s go over how the city of Calgary assessment works. The city of Calgary uses a mass appraisal approach. This means the assessed value is a very general price given to your home based on what homes just like yours, in the same area have sold for. Calgary uses sales data going back 3 years. They then time adjusts these numbers to give them a larger set of data to base their values off.
The city of Calgary uses a sales comparison approach, so they will not compare a 1960’s bungalow to a brand-new infill, or a condo to a luxury custom home. There is a common misconception that if you own an older bungalow and a new development is being built on your street with new infills, your property taxes will rise. These new infills are not going to affect the city assessed value of your home because they’re not comparable properties.
The assessment is also based of the physical condition of them home as of Dec. 31 of the previous year. Now that you know how the city of Calgary determines the assessed value of your home lets see why this value is not a good reflection of your homes current market value.
1. This value does not take into account the current market conditions.
In Calgary, property assessments are a reflection of your homes market value as of July 1 of the last year. Therefor, the value they are providing for your home is often 12-18 months behind the actual current market Value. If the market you are in has low inventory and favor’s the seller, the value of your home is going to be higher than it would be if there is an oversupply of homes for sale and a buyer’s market.
We have recently seen tons of change in the housing market this year. Meaning your home could be worth considerably more depending on the time of year you decide to sell your home.
2. A city assessment does not consider any unique features or upgrades.
Has any one from the city ever enter your property to complete a city assessment? Likely not, this means that they can’t account for any unique features or upgrades that your home has to offer.
If you recently completed a big kitchen renovation the city might not have any knowledge of this. But that renovation will obviously add significant value to your home. The same applies if you never pulled permits to complete the basement of your home. This is obviously going to increase the value your home can sell for but if the city has no knowledge of this, how can they include this in the city assessed value of your home.
Often items that add value to a home like a stunning mountain view or custom upgrades will be left out of the assessed value of your home. Without being able to enter your home and seeing the exact specifics your home has to offer like a real estate agent can, the city’s assessed value is going to be off.
3. The purpose of the city assessment is for taxation.
The city assessment is for the purpose of fairly deriving the amount of taxes owed for homeowners. City assessments are not for the purpose of finding the true market value of your home. If you are looking to find the true value of your home in the current market it is always the best idea to reach out to a local REALTOR ® and have them complete an in-depth comparative market analysis (CMA) on your property. If you have any questions about real estate or would like a CMA completed on your home, please contact us!