As a new year begins and the Eastern Township region prepares for the triennial revision of property assessments, many residents are facing significant increases, often exceeding half the value of their property. This reassessment, which occurs every three years, is usually based on the previous year. For example, the values ​​established for the years 2021-2022-2023 were based on the real estate market as of July 1, 2019. The new assessment will be based on the market as of July 1, 2022, a period marked by the peak of the pandemic, where professionals observed the market in an unprecedented state.

To illustrate this situation more clearly, let’s take the example of the municipality of Potton. Over the past year, this municipality has experienced a remarkable 67% increase in property value. Meaning, a house that was worth $300,000 in 2023 would now be worth $500,000. Although this increase may seem promising for sellers, it is crucial to remember that municipal and land values ​​are often very different and less precise than the actual market value. Keep reading to learn about the differences between municipal and market values.

Municipal Value

The main objective of municipal assessment is to assist local authorities in determining property taxes that owners will have to pay during the year. To do this, assessors are mandated to conduct a comprehensive evaluation of real estate in each area. Thus, the value of your property is largely influenced by that of surrounding properties.

Another crucial reason not to rely solely on municipal value when determining the selling price of a house is that this assessment does not consider fluctuations and changing conditions in the real estate market. For example, during the years 2021-2022, the last assessment was conducted in 2019. However, with the advent of the pandemic, the real estate market witnessed explosive activity, rendering any consistency between market and municipal values obsolete. Furthermore, a municipal assessment does not necessarily reflect the condition of the property in terms of maintenance and sometimes the quality of finishing, nor whether it is self-built or not. These are all subjective factors that can influence the value of a property in the free market.

Market Value

When selling a property, your broker will establish a market value motivated by the reality of the current market. Since each house is unique, its market value is specifically assessed taking into consideration its distinctive features. In this process, the broker you collaborate with will meticulously examine all aspects of the property, whether it be its interior and exterior characteristics, the size of the land, its location, renovations made, as well as other subjective factors.

It is important to note that market value is not an exact science, and it may fluctuate depending on supply and demand in the real estate market. Therefore, it may be higher or lower than the value established by the municipal assessment.

An article from Century 21 Estrie.