There is no other concept within real estate that is more misunderstood than tax assessed value as it relates to market value.

LetB次元官网网址檚 start with definitions.

Market value is the value buyers place on a property. ItB次元官网网址檚 what buyers are willing and able to pay for a specific property at a specific time. Tax assessment is the value a municipality places on a home once a year, to determine its annual property taxes.

From the above definitions you can see at once the vast difference between the two. First of all, the people who determine market value as opposed to assessed value are very different. Buyers determine market value. Government employees determine tax assessed value.

Secondly, the purpose for which these values are determined are plainly different. Government agents working for the tax authority are objective, or should be, in their value determination. They use data such as lot size, house size and very generalized B次元官网网址渟oldB次元官网网址� data from the MLS system. Considering that only a small percentage of homes sell every year, this data is quite limited when used to determine the assessed values of each and every home in a jurisdiction.

Timing is also an important aspect to consider. The tax authorityB次元官网网址檚 data is collected and adjusted once a year, whereas the market that is buyer-driven can change, literally, in two weeks. In fact the market is often very fluid, changing subtly with every property coming on and going off the market at the same time that new buyers are coming in and going out of the market.

Unlike buyers, government agents rarely enter properties to see if there has been any updating. There can be two properties side by side that seem similar on paper: same sized lot, same sized house and built in the same year. But if one has had a recent $40,000 kitchen and bathroom renovation and the other one is still in its original 1950B次元官网网址檚 glory, the tax assessment will not reflectthis difference, but a buyerB次元官网网址檚 estimation of value will certainly be affected.

Buyers and their respective real estate representatives compare properties that not only have recently sold, but are currently on the market in order to determine what value a particular property holds for them. That value can be general in nature, but at the same time unique to each buyer and property.

For instance, a buyer may be willing to pay more for a certain property than another very similar one in a similar neighbourhood, because the first one is just blocks away from where their childrenB次元官网网址檚 grandparents live. This is the type of value that canB次元官网网址檛 be determined by objective data. However, beyond personal reasons, buyers determine value by concrete features of the property itself. Buyers actually enter these properties to see and experience their condition, upgrades, layout, square footage and so on.

Approximately 90 per cent of buyers hire a building inspector to look over everything from the roof to the drainage, electrical system, plumbing, foundation, and so on. And if a major problem is discovered that the buyers were unaware of prior to making their offer, such as a dangerous and complex electrical issue costing many thousands of dollars to fix, a price renegotiation may ensue to reflect a lowered value.

In over 20 years of experience, I have found that, other than in the most general sense, there is no consistent or reliable relationship between tax assessed value and market value.

When in the process of determining the value of a property for the purposes of selling or buying, never rely on the tax assessed value. Instead use the services of a Realtor who will have information on recently sold properties similar to yours, they will have actually seen the condition of the property in question. They will also know the current state of the market, whether itB次元官网网址檚 going up, down or is static. A skilled agent can sometimes know that a certain property is likely to sell for more or less based on experience.

Determining market value is both a science and an art. Buyers, canB次元官网网址檛 be known by objective data only. Most residential buyers buy with their heart first and then look to the data to support their decision.

Valerie Edwards is a licensed Realtor with Pemberton Holmes Realty.

Q: Taking on the B.C. Assessment Authority?

Challenging the B.C. Assessment Authority can be a daunting task, but if you plan on challenging your assessment, here are a few tips to arm you with the knowledge to maximize your chances.

Know your neighbourhood. If you want to be part of the one per cent of property owners to appeal their assessment, having as much information about what neighbours pay, how much assessments have increased or decreased, can help make your case.

Take photographs, of anything you think that might help you. Have you lost your view because trees you canB次元官网网址檛 cut down are blocking it? Have before and after photographs to prove diminished value. Unless you can prove it, you might be out of luck.

Realize your neighbours may not be on your team. A neighbour trying to sell may be trying to maximize the sale price of their home may not necessarily have the same interests as you do. If that is the case, know where you are at and come armed with the market evidence and prove there are appreciable differences between yours and those homes that sell for more.

GR. VICTORIA MARKET UPDATE 禄 MONTH TO DATE JAN. 12/15  COURTESY VICTORIA REAL ESTATE BOARD

禄 83/342 -- NET UNCONDITIONAL SALES/ TOTAL,  JAN. 2014

禄 286/1,090 -- NEW LISTINGS / TOTAL, JAN. 2014

禄 3,020/3,489 --ACTIVE RESIDENTIAL LISTINGS / TOTAL, JAN. 2014