Municipal Assessment vs. Sale Price - Why the Difference?

You are looking into buying a new home.  Once you compare its selling price to its municipal assessment, you notice there's quite a difference.  What explains this price range?

Municipalities primarily evaluate properties for fiscal taxation purposes in order to comply with their imposed provincial obligations.  In short, this process involves finely combing through a municipality in order to segregate it by sector and by property type (construction year, geographical characteristics, etc.).  

Because this compilation is acquired without municipal evaluators personally showing up to assess each and every individual property, socioeconomic and other factors affecting these immoveables' value - positively or negatively - are not necessarily considered during the assessment. 

For example, a municipality assesses residences in 2006 based on properties previously sold in each sector.  In the spring of 2007, the municipality will send out its new triennial property assessment and taxation report to all home owners.  When one of these home owners decides to sell his property in 2009, his municipal assessment will still reflect the value of the home calculated in 2006 based on sales which occurred prior to that.  Hence, properties which have been maintained, renovated or modernized by their owners will retain much more resale value than their assessment. 

However, a property that hasn't been maintained or upgraded by its owner will also be subjected to a rise in resale value although it should have seen a drop.  This property will thus become over-evaluated.

This is one of the reasons people often call upon realtors when planning the sale of their property. They are qualified professionals who have the required resources and tools at their disposition as well as the knowledge and know-how to determine fair market value.

So what exactly is fair market value?

The amount someone is willing to pay for a property based on similar properties in similar sectors with similar socioeconomic factors.  

Two identical properties located in the same municipality will not sell for the same price if one is situated near a children's park and the other near an industrial park.   Two identical properties, each located in a small municipality, will not sell for the same price if one of these municipalities has a touristic vocation and the other does not.  

Your realtor can help you determine which factors affect your property, its sector and its specific market in order to set a sale price that will attract the most potential buyers... closing with a sale in which all parties feel they've benefitted.

Your realtor can also guide you when purchasing a home to ensure that you are not buying an over-evaluated property.

Kindly,

Sylvie Brault, Courtier Immobilier - Century 21 Realisation - sylvie.brault@century21.ca - 53, rue Du Pont, Quebec, J0J 1A0 - Cell 450-521-0018 - LAISSEZ MOI M'OCCUPER DE TOUT ET SURTOUT DE VOUS!