In general terms, market value is the price expected if a reasonable amount of time is allowed to find a purchaser and if both seller and prospective buyer are fully informed. For assessment purposes in British Columbia, market value is the most probable price that an unencumbered property would sell for on the open market on July 1st.
The annual assessment process is often a confusing one for many commercial and residential property owners. Typically there is a difference between the property value assessment on the assessment notice and the current market value as determined by a REALTOR®.
This difference is a result of two factors. The first factor involved BCA’s mass appraisal system, which calculates property value by evaluating prices for homes sold in each neighborhood or for units in a strata complex and then applies the information to arrive at an assessed value. This information is typically obtained from MLS sales, NOT by visiting the properties in question. The variables BCA uses to calculate this value include house type, square footage, age, heating, property classification or use, and additions or demolitions of features such as garages, sheds, pools and spas.
The second factor depends on the time at which a property is assessed. Normally, a 2012 assessment notice is BCA’s estimate of a property’s market value as of July 1, 2011, whereas a REALTOR®’s market value reflects the current state of the market, not the market six months ago.
“Market value assessment” is widely considered to be the fairest system for distributing the property tax burden. As the real estate market can change very quickly, depending on an historical assessment (July assessment for next year’s tax purposes) to be an accurate indicator of market value can be erroneous.