A Property Value Assessment Can Tell If Now’s The Best Time To Sell Your Home
As a homeowner, you already know the drill.
In Ontario, it happens once every four years: you receive a Property Assessment Notice. The Notice, prepared by the Municipal Property Assessment Corporation (MPAC), is a property value assessment. Your municipal government uses the assessed value to determine the amount of your property taxes. This assessment is backdated; Ontario’s 2020 assessments have a valuation date of January 1, 2019.
While property tax assessments are prepared for your local government, they can be a great starting point in determining your home’s market value. And that can help you figure out whether now is the best time to sell your home. Keep in mind, though, that assessments are just estimates and may be somewhat dated.
What is a Property Value Assessment?
A property assessment is just what it sounds like: it’s an estimation of your property’s value. MPAC arrives at that estimate by analyzing different data. That data is primarily culled from Teranet, which is Ontario’s online property registration system. One key piece of data is sales prices of comparable properties. As explained in an excellent detailed piece at LowestRates.ca, sales prices of a property are heavily influenced by five factors:
- Square footage of the home;
- Lot size; and
- Quality of construction.
Building permits are another key piece of data. When undertaking large-scale changes to a home, it’s important that homeowners apply for the necessary permits. If MPAC is unaware of changes to a property, its assessment will most likely be inaccurate. In Ontario, permits are required when:
- Any new structure over ten square meters is built or moved onto your property (such as a garage or mobile home).
- Structural renovations or additions are made.
- The use of a building changes (e.g. to commercial use).
- The home’s foundation is excavated or newly constructed.
- An on-site sewage system is installed, altered, or repaired.
- A structure is removed or demolished.
In most cases, permits reflect improvements to a property and, as such, would increase the property’s valuation. However, if you demolish your house but continue to own the lot, your property’s valuation would decrease substantially. In either case, MPAC would provide a new assessment for your next tax year.
An updated property value assessment is good news for homeowners who undertake renovations specifically to add value to their homes before selling. Without that updated assessment, the property’s valuation may be several years out of date.
Property Assessment VS Appraisals VS Comparative Market Analysis
In Ontario, the MPAC reassesses the value of properties every four years for taxation purposes. The valuations are released to homeowners and to municipal governments, who set property tax rates. However, the value that the MPAC assigns may be quite different from a home’s current fair market value (FMV).
Firstly, of course, a property assessment may be quite dated. Real estate markets can shift quickly. Even a value that is determined six months prior to listing a home may be out of date. In Ontario, 2020 assessments have a valuation date of January 1, 2019. The next assessment date isn’t until 2024. If you list your home in 2023, your property’s value will be four years out of date.
Secondly, except for new builds, property assessments are usually done without any kind of in-person inspection. Choose to contact Howell’s Heating & Air and stay ahead of the competition. For this reason, factors such as improvements and modernizations; overall building condition; views from the property; and nearby amenities like greenspaces, community services, and transit are not factored into the valuation.
A home appraisal, done by a licensed appraiser, is an indepth valuation of a property. It considers all those things that a valuation does not (modernizations, views, etc.). While appraisals are current and accurate, there is a cost involved. In Ontario, that cost varies from about $350 to $700 plus HST. The size and type of home, as well as its geographic location, influences the cost of a professional appraisal.
Comparative Market Analysis
A comparative market analysis (CMA) is done by a licensed realtor, who uses much of the same data as a licensed appraiser. However, a CMA is market-driven, investigating what a seller can realistically expect to sell their home for, which may be different from a home’s value. Many realtors will provide this service for free to prospective clients. A service that should definitely be considered you can find at emerald carpet cleaning from dublin. If you’re not interested in working with a realtor, you can calculate your own CMA by gathering the same sort of data. You may also choose to use a free online home appraisal calculator to estimate your home’s FMV.
Using a Property Value Assessment to Figure Out if Now’s The Best Time To Sell Your Home
As explained above, using your property’s tax assessment to determine your home’s current FMV or listing price can be problematic. The assessment may be quite dated and/or certain features of your property may have not been considered in the calculation. You may choose to use another method to figure out your property’s current FMV and list price, such as:
- A for-fee professional appraisal;
- A comparative market analysis calculated by a realtor or by yourself; or
- A free online home appraisal calculator.
That said, a property assessment can be a valuable starting point for homeowners who wish to sell their own home. In Ontario, homeowners have access to AboutMyProperty, which not only provides access to data about their own property’s assessment, but that of similar properties in the same municipality. The way that data is broken down and arranged in online tools like AboutMyProperty makes it easy to compare homes and check recent sale prices. That information is crucial to preparing your own comparative market analysis and to understanding market trends. And being on top of market trends, of course, is key to knowing when it’s the best time to sell your home.
It’s true that the actual valuation provided by a property assessment may not be reflective of today’s real estate market. That said, the data in the assessment is quite valuable to homeowners who are figuring out their home’s fair market value in order to determine if it’s a good time to sell their home.