The success of a real estate transaction largely depends on setting the right selling price for your property. It’s crucial to avoid basing your sale price on the municipal assessment. Instead, you should focus on the property’s market value.
In this article, we’ll clarify the distinction between these two concepts and explain why pricing your property according to its municipal assessment can lead to missteps. Let’s see why.
Why shouldn't you base your sale price on the municipal assessment?
Accurately estimating a property’s value can be challenging. Many people, hoping to save money while finding the optimal selling price, might be tempted to rely on the municipal assessment instead of hiring a professional appraiser.
However, this is a mistake. The municipal assessment and the market value of a property are not the same. It’s always best to consult an expert, such as a real estate agent or a certified appraiser, to accurately assess your property’s market value and determine the right selling price.
While both assessed value and market value are calculated using similar techniques, they serve very different purposes.
Municipal assessment: calculating your property taxes
As the name suggests, the municipal assessment is conducted by the local municipality to determine property taxes for homeowners. Its primary function is to help the municipality establish how much home owners will pay in taxes each year.
Certified appraisers are employed by the city to conduct a mass appraisal of properties. This means that the values are estimated for groups of comparable homes rather than for each individual property. As a result, your home’s value is approximated based on similar properties in the area.
While the municipal property assessment is performed by professionals, it does not accurately reflect the value of each home. It serves merely as a guideline and does not capture the true market price of individual properties.
This assessment is based on data as of July 1 and is only updated every three years. It does not account for the fluctuations and conditions of the current real estate market, as it reflects value from several months prior.
Consequently, the municipal assessment is not a reliable indicator of what you could expert to sell your property for.
Market value: a representation of the real estate market
Market value is specifically assigned to your property by a professional appraiser who evaluates all aspects of the home, interior, exterior, land, location, and more. The appraiser may also compare your property to similar homes and recent sales in the area to determine an approximate market value.
Unlike the municipal assessment, market value is not a fixed figure; it fluctuates based on the dynamics of supply and demand in the real estate market. As a result, it can be higher or lower than the value set by the municipal assessment.
Since the market value assessment considers various factors that influence your home’s price, it provides a much more accurate and relevant estimate for real estate transactions. Consulting a real estate expert ensures you receive a fair evaluation of your home.
What can increase the value of your home?
Renovations and improvement projects can significantly affect your property’s market value. A freshly updated home that aligns with current trends is likely to see an increase in value, while a property that hasn’t been updated in years may decline in market value.
However, it’s important to note that not all renovations will yield the same return on investment. Before putting your home on the market, research which improvements are most worthwhile to undertake to maximize your home’s value.
What value should be used to set the sale price of your property?
Now that you understand the difference between municipal and market value, it’s clear why the municipal assessment should not be used as a basis for setting your property’s selling price.
The municipal assessment doesn’t reflect the current real estate market conditions when you decide to sell. Since it is not updated regularly, relying on it to determine your home’s sale price can be a mistake. If you use an amount that is too low, you risk losing money; if it’s too high, you may struggle to sell your home. Either scenario can work against you.
Market value is the most suitable estimate for establishing the sale price of your home, as it considers the real estate market at the time of the sale. Setting a well-researched price will help ensure a smooth real estate transaction.
Real estate brokers or certified appraisers: which expert do you need to evaluate your property's market value?
It’s essential to know that only a qualified expert can accurately assess your home’s market value. Depending on your needs and specific situation, you may choose between a certified appraiser and a real estate broker.
Not sure which professional to consult? Read on to help you make an informed decision.
The certified appraiser: an appraisal expert
When it comes to appraising a property, the certified appraiser is the professional that typically comes to mind. With extensive training in real estate appraisal, they have the expertise to accurately determine your home’s market value.
During this assessment, the appraiser will visit your property and use various valuation methods to produce a detailed report justifying the established price. This report can be invaluable in demonstrating to potential buyers that your asking price is realistic and reflective of the current market conditions.
What is the cost of a certified appraiser in Quebec?
If you considering hiring a certified appraiser, you should budget at least $500 for a single-family home. Keep in mind that the cost may vary based on the type of property, such as a multiplex, and the appraiser’s level of experience. Additional factors may also influence the overall cost of the evaluation.
The real estate broker: an ally in selling your house
If you’re working with a real estate broker, or plan too soon, you should know that this professional also has the expertise to evaluate your home’s market value. Their services come at no upfront cost, as they are compensated through a commission upon the sale.
To determine the market value, the broker utilizes real estate statistics, examining comparable properties and recent sales in the area. While their assessment may not be as detailed as that of a certified appraiser, since it doesn’t result in a formal report, it still offers a valuable estimate for setting an appropriate selling price for your property.
Looking for an expert to determine your property's market value?
XpertSource.com can help you find a certified appraiser or a real estate broker. When you tell us about your project, we put you in touch with qualified resources for FREE. Simply fill out our form ( it only takes a few minutes ) and we will connect you with professionals.
