Have you ever wondered how much your Hamilton & Halton home is worth? You aren’t alone. Determining “Fair Market Value” is a constantly changing thing and major balancing act. You may wonder why?! As a home owner and home buyer, that appraised value means two VERY different outcomes. That’s because buyers want a house to appraise on the low side—they want to pay the least amount on a home as possible. While sellers want the same house to appraise on the high side—to make sure they put more money in their pocket. And for the owners of a home who aren’t selling —they also want the appraisal to be on the low side, in order to keep the property taxes down.
So with all these different agendas and points of view, how is the fair market value of a real estate property actually determined? (This is where it gets interesting!)
Once a year, your region along with MPAC (Municipal Property Assessment Corporation) will send all area homeowners official notices that put a dollar value on their property. (This is your notice of assessment you get every year) And property taxes are based on those dollar values. The amount you pay in taxes is calculated by taking the property assessment and multiplying it by the predetermined “Mill Rate” to come out with your tax amount for the year. But long before those notices get sent out, a long, a very thorough and detailed process is conducted. First, the land is valued (at the local going rate for your area) as if it’s vacant—an empty lot, in other words. Then any improvements are described and measured. Improvements can consist of the house and any other structures, pools, sheds, garages, and so forth. Next, if the house isn’t brand new, the replacement cost is considered, as well as depreciation; the year the house was constructed and the condition of the property are factors here. Appraisers then must take the critical step of comparing the value of the house with recent selling prices of similar homes in the neighborhood. At this point, the appraisal might stand “as is”—or it might be adjusted upward or downward.
Market Value is a theory, in other words—not an unchanging fact.
But as you know, this isn’t a perfect world! In a perfect world, you have to have willing buyer and a willing seller. Neither is under duress. Both are in a position to maximize gain and are trying to do this. But in the real world, things are rarely that simple and equally balanced. Which is why people feel differently about the appraisal value of a house. It really depends how strong their position is as a buyer or seller.
Does the local economy come into it at all? You bet it does.
Ask a successful Realtor about that! He or she will tell you they’ve noticed that Hamilton & Halton’s fast-growing economy is attracting people from other areas who consider real estate here a bargain. That helps fuel increases in property values. (If you have lived in Hamilton & Halton for some time, you can attest to the large gains in real estate prices over the years!)
So—now you know where that Grand Total comes from.
The other major thing to take into account is that the tax assessment does not (and usually rarely) equal the current sales value of a home. There is much more that goes into calculating that as well. If you are interested in finding out what your home would be worth in today’s real estate market, be sure to give us a call or drop us an email at Info@ThePremierHomeGroup.com
Now, you’re armed with the information you need to make a better house-buying decision. For instance, you can understand how two virtually identical houses that are in two different neighborhoods could be very far apart in price and appraised value. And why your choice of the right house in the right neighborhood could be worth a not-so-small fortune to you right now—and years down the road.
We hope this information was helpful to all of the readers of our blog. There are many more great articles to come! Be sure to share with your friends and family!