ASK SAM

THE FOUR VALUES OF YOUR HOME: WHICH ONE MATTERS MOST?

QQ: I had my house appraised, but the value wasn’t the same as the amount that the City of Calgary gave me on my tax assessment. Why are they different?

There is a lot of confusion when it comes to the actual value of your home. The tax assessment from the City of Calgary differs from the number the home appraiser provides to the bank. And your friends and neighbours have an entirely different opinion. Your home has four different values: the tax assessment value, the appraised value, the friends & family assessment and the market value. Here is how you know which value is right.

Tax Assessment Value

The tax assessment value that you receive from the City of Calgary at the beginning of each year is the number that varies the most and has the least to do with how much your home is actually worth. It is calculated based on past sales in your district and your square footage. It is not based on the quality of your property, updates you have completed, layout and the location within the neighbourhood. All of these factors have a huge impact on your home’s value. Ideally, it’s most advantageous to have a low tax assessment value so that your taxes are reasonable. If the number you are given is high, you can dispute it with the City to reduce your tax bill. Ultimately though, this number has less to do with how much your home will sell for on the open market than you think.

Appraised Value

A professional appraiser is hired by your lending institution to determine the value of your property for banking purposes. They have a strict set of guidelines that compare your home to similar homes on the market that are close in size, location and amenities. It is a more accurate value than the tax assessment. But, I have seen appraised values of houses under construction get a value lower than the house is worth because the appraiser cannot envision the final product or because there is nothing else in the neighbourhood of the same caliber. I have also experienced home owners receiving higher appraised values for their homes.

FRIENDS & FAMILY ASSESSMENT

Your friends and family members will always think your home is worth more than it is because of their relationship with you. When it comes to your immediate neighbours, they will want your home to be worth a higher number because that means their property is worth more too.

Market Value

The market value is based on supply and demand, the local economy, job market, migration rates and past sales. The type of property you own, the district, the street, the quality of your property, its unique features and floor plan, the square footage, and its condition all factor into this equation. The only way you can determine the market value of your property is to have your Real Estate Agent do a careful analysis of all this data. All agents have access to historical data of homes that are listed or sold, but not all have the experience to guide you to the right price. At the end of the day, the only value of your property that is completely accurate is the amount that a buyer is willing to pay for it on the open market, and that is the value that matters the most.

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