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Market value and municipal assessment: not to be confused!

The success of a real estate transaction depends in part on the ability to set the right selling price for your property. That’s why you should never establish the sale price of your propety on the municipal assessment. Instead, you should rely on the market value of the house.

When time comes to sell your property, finding the optimal selling price may prove to be a challenge. When in doubt, many people are inclined to rely on municipal assessment figures rather than to use a professional appraiser.

However, it is a mistake because the municipal assessment and the market value of a property are not equivalent. In fact, it is always best to use an expert, whether it's a real estate broker or a certified appraiser, to find out what your home will cost on the market.

In this article, we will explain the difference between those two notions and why you should never price a property based on its municipal assessment.

Why not rely on municipal assessment to determine the sale price of a property?

Although, the estimation of the market value and the property value of a property are based on similar techniques, they have very different purposes. 


Municipal assessment to calculate property taxes

As the name implies, the municipal assessment is conducted by the municipality in which a property is located. Its sole purpose is to help the municipality determine the amount of property taxes homeowners will have to pay during the year.

Certified appraisers are used by the city to perform a mass appraisal of properties. Values are calculated for blocks of comparable homes, not specifically for each home. In doing so, the price of your home is estimated according to similar properties nearby.

With that being said, the municipal property value assessment, while done by a professional in the field, is not done accurately for each home. It is only used to approximate the value of the properties and not to obtain the true market price of each property.

This type of assessment is valid as of July 1, 18 months before the city's assessment roll comes into effect, and is only redone every 3 years. It does not follow the instabilities and conditions of the current real estate market, since it is set for a period of several months. It is therefore not representative of the price you could obtain for your property if you decide to sell it. 

Market value related to the real estate market

The market value is assigned specifically to your property. It is assessed by a professional who takes into consideration all aspects of the home, i.e. interior, exterior, land, area, etc. The appraiser may also compare the property to other similar properties and recent sales in the area to get an approximate market value.

Unlike the municipal assessment, market value is not a fixed amount. It constantly fluctuates according to real estate market supply and demand.  It can therefore vary above or below the value established by the municipal assessment.

Because the market value assessment takes into consideration many factors that can affect the price of your home, it is much more accurate and relevant than the municipal assessment in a real estate transaction context. The evaluation of your property by a real estate expert ensures that you get a fair and personalized estimate of the value of your home. 

The impact of renovations on the market value

Renovations and improvements can have an impact on the market value of a property. A house that has been freshly renovated is likely to increase in value. The reverse is also true: if no changes have been made in years, the market value may decrease. However, be careful, not all improvements have the same potential to increase the market value of your home. 

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What value should be used to establish the sale price of a property?

Now that you know the difference between municipal and market value, you can probably understand why the municipal assessment should not be used as a reference for setting the selling price of your property.

It does not take into account the real estate market at the time you decide to sell. It is not up to date and therefore determining the sale price of your home based on the municipal evaluation is a mistake. Either the amount set will be underestimated and you will lose money, or it will be overestimated and you will not be able to sell quickly. This can only be to your disadvantage.

The market value is the most appropriate estimate to define the selling price of your home, because it takes into account the real estate market at the time of the sale. A properly set price will ensure that your real estate transaction goes smoothly.

Real estate broker or certified appraiser: which expert do you need to evaluate your property's market value?

If you've read this far, you know that market value is the most accurate way to set a selling price. Only a real estate expert can accurately assess your house's market value. Depending on the situation or the reason why you want to know your home's value, you can call on two different specialists: the real estate broker or the certified appraiser.

Not sure which professional you should use? Read on to help you make your choice.

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The certified appraiser for getting a report

Obviously, the certified appraiser is the expert we immediately think of when it comes to appraising a property. He or she has extensive training in real estate appraisal and therefore has the ability to accurately determine the market value of your home.

By visiting your home and applying several valuation methods, he is able to produce a detailed report justifying the price established for the property.  This report can be very useful in proving to potential buyers that the asking price is realistic and corresponds to the reality of the current market.

Note that if you wish to hire this expert, you will need to budget at least $500 for a single-family home.

The real estate broker for selling your house

If you are already doing business with a real estate broker (or if you plan to do so soon), you should know that this expert also has the necessary skills to evaluate the market value of your home. Furthermore, his services are completely free of charge, since he is compensated with a commission at the closing of the sale.

To determine the market value, the broker uses real estate statistics. He relies on comparable properties, previous sales in the area, etc. Although not as thorough as that of the certified appraiser (because it does not result in the production of a report), his evaluation provides an excellent estimate for setting an appropriate selling price for your property.

Looking for an expert to determine your property's market value? 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.

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