Clearing Up a Misconception About Assessed Value

On Saturday the local newspaper, The Nanaimo Daily News, published an article that spoke of property taxes and how they break down.

Believe it or not, it’s the first time I’ve seen someone try to explain in a clear and concise fashion how this works in our area. It’s not very often I tip my hat to a newspaper, in fact this may be the first time but I believe giving credit where it is due. Good work!

Being a Realtor I have an inside perspective on one detail of the bill which I think misleads people. It is understandable why the taxing system works the way it does and I also understand why so many people have the misconception that they do. That being that the assessed value of a property is accurate enough to be used as part of their decisions making processes of buying or selling real estate. I am not trying to blame anyone, I just want to clear up this all too common misconception.

Quite often people will tell me the assessed value (for taxes) of their property, or they will ask about the assessed value of a property on the market that they have some interest in. My answer is that although the prices are generally in the right ballpark, that they are not usually so accurate and in many cases way off the mark. Not everyone takes me for my word, and thanks to my university years I am in the habit of being able to back up what I claim. So when someone challenged me on it one day I pulled up a large sample of recently sold properties and compared the sale prices to the assessed values and created an average by use of a computer program Realtors have access to.

Not five minutes ago, I did this again for the purpose of this post. Read on if you are skeptical, curious or the sort who likes stats and numbers.

According to the program us Realtors use known as “Interface”, there were 111 properties that sold in the Nanaimo area from April 26th until May 26th this year. There were five properties that didn’t have assessed values attached to them so they were removed from the list. I averaged the numbers on all of these listings and here is the pertinent info I found:

Average List Price:                  $347,555

Average Sale Price:                 $333,170

Average Assessed Value:        $313,811

Of course, we know that the people making these assessments have not been inside the properties so they have no idea what the places are like. As I understand it, hey have a budget that needs to be payed for and they have to find ways to justify the way they collect it. Now before you start complaining, think of how much more it would cost to run the system if they went to each home and made sure it was totally accurate. I don’t know about you, but I’m glad they don’t. Again, I’m not saying the system needs to change, I just think people should know what these assessments are NOT for: pricing a property that’s to be sold.

I might be labouring the point, but here are some of the more notable differences I found in that list of recently sold properties. You’ll notice that they tend to under value the properties rather than overvalue. Not a bad thing for the home owner whose home value is inaccurately assessed.

Sold Price Assessed Value

$65,000             $108,000

$272,380           $105,000

$360,000           $340,000

$370,000           $311,000

$384,000           $440,000

$400,000           $446,000

$515,000           $207,788

$718,000           $557,000

$1,500,000        $983,000

Ryan Coffey

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