At this time every year I receive emails and calls from consumers and past clients asking for an updated Comparative Market Analyis (CMA) to help determine if the City of Calgary's Tax Assessment is accurate or if it should be appealed. Well, the first answer is that real estate agents cannot do market evalations for anything but determining the value of a home in the current market for the purpose of buying or selling. We cannot provide CMAs for the purpose of appealing your taxes. The reason for this is that most real estate agents and brokers are not certified or licensed to provide appraisals. And, the methods we use to calculate market values are not appropriate for calculating either an appraised value nor an assessed value for tax purposes. Real estate agents and brokers consider current and future market demand for a CMA, while the other methods cannot.
While the values may or may not be similar, they are actually quite different.
First, let me explain what is a property tax assessment.
The city estimates the market value of your property for the purpose of distributing fair and equitable taxation. Your assessment reflects an estimated market value of your home based on the valuation date of last July 1st, but with improvements based upon last December 31st. So yes, any improvements you have made to your home, as recorded based on the building permits issued to your home, are all considered in the calculation. And yes, the city uses the local real estate board's database and supplement that data with all the private sales registered at land titles each year -- although those are less than about 5% of home sales including all builder sales.
This time delay also means that any real estate market conditoins which may have changed in that time would not be relected in your assessment. Typically, all similar properties within a similar area that are sold during the year from July 1st from 2-years ago up until June 30th of last year are compared. Assessed values are based on these prices. This is called a "Sales Comparision Approach to Valuation." If your home sold in that time period, it would be recalibrated for valuation purposes.
Why Assessed Value Doesn't equal Market Value?
Property assessments have never been an accurate indicator of the current real estate market value of your home -- although they are getting better (when there is a stable market). For comparisons sake, and generally speaking, if homes in an area are selling for 5% above their assessed value, then your home should sell for roughly 5% above its assessed value -- on average.
Secondly, the current condition of your home - colours, tidiness landscaping, and even furniture arrangement have a big influence upon a potentilal selling price as they impact a potential buyer's emotions. An experienced real estate agent or broker can take those considerations in to account when recommending a selling (or purchase) price. Based on that price, a buyer may purchase the home for slightly higher or slightly lower than that number. If a homes sells for any more than about 5% above or below it's INITIALLY listed price then it was priced too high (or low).
While it is great entertainment for many consumers to watch the list price of homes on agent websites or realtor.ca, those numbers do not reflect selling prices. While it is actually against our trade associations rules to provide the selling prices of homes to the general public, we can tell you how and where to get it on your own since the information is in "the public domain" and is not confidential at all. Giving away all that publicly accessible information would eliminate the need for all those "free market analyses" you see advertised by agents to get your contact information, now wouldn't it?
So What Can You Do?
Because the assessed values for tax purposes are calculated from the previous year, there is a possibility that the real estate market value of property will be different. In fact it is quite likely. If you apply early enough in the year, then you can contact the city to review, or appeal, your assessment. The review time frame is indicated on each year's assessment notice. If you believe the value is off by more than a few dollars, one of the first steps is to get an appraisal done. Most appaisers charge about $300 for the appraisal (although there are no fixed rates), but you must indicate to them that the purpose of the appraisal is for a property tax appeal. This is one of the very first questions an appraiser will ask. As you can imagine, the appraised value for the purpose of tax appeal is likely to be different than the value for the purposes of selling a home, as is the appraised value for the purpose of buying a home, or for a lending value. All are going to be slightly different -- but not likely more than about 5% of each other. Then based on this number, determine if it is worth appealing. Or based upon the cost of the appraisal alone, determine if it is worth even starting the appeal process.