Market Value, Appraised Value, and City Assessed Value

Market Value, Appraised Value, and City Assessed Value

Very often when I am in a client’s home discussing their home’s value I am asked the difference between these 3 valuations (Market Value, Appraised Value, and City Assessed Value).

“But David the City says my home is worth x, why is there a difference in the numbers?”
I explain that all 3 of these valuations are “correct” within each of their individual contexts which I will explain.

Market Value is the actual price that a buyer will pay for your home as of today’s date. (Markets are dynamic and can shift from day to day and week to week.)

Appraised Value is the value assigned to a home by a certified property appraiser based on similar homes in your area which have typically been sold in the last few months.

City Assessed Value is a “broader” assessment of your home’s value based on the City’s computer model of your neighbourhood data.

In most cases, when it comes to market value and appraised value, a Realtor and an appraiser will most likely have been to your property to visually inspect it and see what improvements and amenities you may have. In the case of City Assessed Value, it is very likely that it has been years that the city has been to your home. The City is relying on historical data and building records.

In all three cases, if the question remains “Which one is correct?” the answer is “It depends on intended use of the information.”

If your intention is to sell your home within the next few months, the best course of action would be to get a “Market Evaluation” from an active Realtor. In fact, if you are selling, it’s a good idea to get three of these evaluations – they should all be fairly close. Be wary of one that is either very high or very low from the other two. A veteran Realtor should not only be able to give you an accurate number based on recent sales data but also will be able to give you an idea of market trends in your area. “What is the current feel of the market?” A veteran Realtor should be able to answer this question.

If your intention is to remortgage your home or get a line of credit then your bank will want to get an “Appraisal” of your home for lending purposes. An appraiser will visit your home, prepare an Appraisal using our Realtor MLS sales data and then arrive at a number. Based on this number, your bank will determine the mortgage or line of credit amount that they will loan you.

If you are not moving and not refinancing, then most likely the “City Assessed Value” would interest you the most. When you receive your City Assessment in the mail and if you agree with it, then you need to do nothing. If you feel it is incorrect (too high) then there is an appeals process you can go through with the City.

If you need any further help navigating any of these three “valuations” please call or text me anytime at 204-981-1940 and I can discuss your specific situation and point you in the right direction.

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The Housing Market Explained

If you have read any of the latest issues of the Globe and Mail, watched the national news on TV or heard any recent press releases from CMHC (the federally regulated mortgage insurance company) you would likely think that we are in a housing “bubble” or that our properties are “over valued.” As always, the clearer explanation is a bit more complex and a bit less “black and white.”

Firstly, much of what you may read and hear about the housing market not only refers to the largest markets in Canada but also the ones that are the most volatile such as Toronto,Vancouver and Calgary. These are the markets that drive government policies as it relates to the housing market and influence campaign promises at election time.

Secondly, our local Winnipeg market which has been a very strong seller’s market over approximately the last ten years would still not be considered “volatile.” Even after a strong decade of price appreciation we in Winnipeg still have some of the most affordable housing in the country. Try finding a 3 bedroom home with a garage in good condition and in a quiet safe area for $300,000 in Vancouver or Toronto and you will see what I mean.

Thirdly, even within Winnipeg itself,different area and types of properties will experience different levels of demand. Homes in the newest  areas of the city, the south west corner for example, where builders have built large numbers of homes in the $400+ range, will take longer to appreciate in price and sell as there is a clear “over supply” at the present time.

Condos also may experience similar conditions as supply has also increased dramatically and has affected both appreciation and “days in market” for those owners who are selling.

Interestingly, homes in some of the older and more established areas of the city such as Wolseley, River Heights, St.James, Ft.Garry, Norwood,and the St.Vital area are still attracting strong interest and in some cases multiple bids from waiting homebuyers.

Recently the Canadian Real Estate Association ran an ad campaign with the slogan “All markets are local.”  As it relates to deciphering the National housing  market, I couldn’t agree more.

Wonder what your property is worth in today’s market?
Find out at www.2015WpgHomeValues.com
Do you have a friend or family member in another city who is curious?
Have them check out www.2015CanadianHomeValues.com

Watch for my next blog: Why is my city property assessment different from its market value?

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The Window Of Opportunity

The Window of Opportunity

by David Thompson

Very often during the course of the year I will have buyer clients ask me “when is the best time to buy a home?”

My answer is, if you are looking to get the most home for your money and get the best “value” possible, then the best time to buy would be when other people are not.  The way to gauge this is to use statistics. While it is incorrect to say that no one buys homes in the summer time, we do historically have a 25% drop in homes sold in these months versus the peak spring months of April and May.

What that means specifically for a home buyer is that they likely will face much less competition than during a more active time of year.  Also, sellers on the market may want to settle their home sale prior to the beginning of the school year and therefore may be more open to considering an offer than they would be at other times of the year.

This ability of a home buyer to recognize the timing opportunity and act upon it may realize potential savings in the thousands of dollars range.

It is a very interesting time of year in the real estate market and, in my opinion, one of the two “30 day real estate windows” of the year.

If you would like to know more about my theory and strategies for the upcoming 30 day period or if you would like to see some examples of what I was able to negotiate for clients during the last 30 day window of opportunity please call or text me anytime at 204-981-1940.
Apple product users may also iMessage me at davidthompson1@shaw.ca

Follow me on Facebook: David Thompson Home Selling System

About the author:
At 53, David has spent more than half of his life as a full time residential Realtor and has helped over 2500 clients buy or sell a home during that time period.
Among other awards David is also the recipient of the Re/Max Lifetime Achievement Award currently held by less than 4.8% of
Re/Max agents worldwide.

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The Science of Long Term Behaviour

The Science of LTB (Long Term Behavior)

Yesterday the Toronto Maple Leafs announced their new head coach, Mike Babcock, to the national media.

Babcock has just finished a very successful 10 year run as the head coach of the Detroit Red Wings.  He was so successful, in fact, that he had the highest winning percentage of any NHL coach during that decade long period.  He won a Stanley Cup Championship during that time, and although it is true that there have been other coaches who have won more, nobody exhibits better “long term behaviour” in being a hockey coach over that time. The Leafs have made a decision based on the examination of Babcock’s consistent LTB which leads to consistent results.

When choosing to engage someone’s services do you look at that person’s LTB? It usually is a good predictor of the outcome you can expect. It’s definitely a good indicator in the real estate world.

Long Term Behaviour=Consistent Results

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What is the Difference between 2.44% vs. 2.59%?

I am passing along this important information courtesy of my friend and mortgage broker Laurie Foster of VERICO One Link Mortgage.

What is the difference between 2.44% vs. 2.59%

In an effort to provide you with the most accurate up to date information possible we wanted to give you some information about the 2.44% 5 yr fixed rate offering which has been advertised.

While this is a product we have full access to we always want to ensure that clients know both the advantages and disadvantages of what is offered so they can truly make a decision based on an apples to apples comparison. We always try to get the client the absolute best rate available to them but we like to ensure that they know all of the potential outcomes of taking this rate. While this does provide a client with a lower up front rate, this product can be quite punitive to clients should they need to make any changes to the mortgage.

Should an instance arise where the client needs to payout or discharge this mortgage early, this particular product has a penalty assessed on the client which is the greater of a 3 month interest charge, the interest rate differential penalty OR 3% of the balance of the mortgage at the time of discharge/payout.

For example on a $250,000 mortgage, the client would be assessed a minimum penalty of $7,500 should they need to discharge the mortgage or pay it out on sale.

When we compare this same example to the discharge of a full service mortgage with one of our preferred lenders the difference is significant.

On this same $250,000 mortgage using a full service product with a rate of 2.59% on a 5 yr fixed rate mortgage, using today’s rates, the client would only be assessed a 3 month interest charge equalling $1,618.75, which is $5,881.25 less than the 2.44% rate offering would result in.

When we have presented this information to clients and they weigh out the potential advantages of the slightly lower rate vs. the potential for incurring a large guaranteed penalty on the back end the vast majority decide in favour of the greater flexibility offered with the full service mortgage term.

Should you have any questions at all please don’t hesitate to reach out to either Laurie or Ryan and we’d be happy to answer your queries.

Regards,
Laurie & Ryan

Laurie Foster, AMP Ryan Godin, B. Comm (Hons)
VERICO One-Link Mortgage & Financial Associate to Laurie Foster, AMP
Unit 100-99 Scurfield Blvd VERICO One-Link Mortgage & Financial
Winnipeg, MB R3Y 1Y1 Unit 100-99 Scurfield Blvd
Phone: 204-981-2354 Winnipeg, MB R3Y 1Y1
Fax: 204-480-4179 Phone: 204-979-0077
Email: laurie@lauriefoster.com Fax: 204-480-4179
http://www.lauriefoster.com Email: ryan@lauriefoster.com

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Buying a Home? Here is Some News You Can Use…CMHC Insurance Changes

First of all let me clearly explain what CMHC stands for and what is it exactly.
CMHC stands for the Canadian Mortgage and Housing Corporation.  CMHC is a Canadian government backed insurer that insures banks against default by mortgage borrowers.

All Canadian homebuyers who buy a home with less than 20% of a down payment must obtain mortgage insurance either though CMHC or Genworth (a private insurer with very similar fees and guidelines as CMHC).

The amount of the mortgage insurance premium is based on home much you have as a down payment, and beginning June 1/2015 the premium for borrowers who put less then 10% down will go up to 3.60% from the current 3.15%, an increase of approximately 15%.

Practically, what this means is on a purchase of $300,000 with 5% down ($15,000) a mortgage of $285,000 will carry an insurance premium of $10,260. Prior to June 1, 2015 the premium on the same sized mortgage is $8977, a difference of almost $1300.

The premium can be, and almost always is, added onto the mortgage amount. While this will cost the homeowner more money every month, there is no “out of pocket” payment needed if they don’t want to pay it up front (and most people don’t).

However what most people don’t know is that on top of this mandatory insurance premium there is provincial sales tax (PST) of 8% which IS payable upon closing (the day you take possession of your new house). On a mortgage of $285,000 this amounts to a little over $800 in tax. This is over and above the rest of the “closing costs” that your lawyer will ask you to bring in when you are about to close on your home.

A couple of other things to keep in mind: this new insurance premium increase does not apply to borrowers who have a 10% down payment or more (so the more you can put down on your new home the better) and this increase also does not apply for any mortgages that have been previously applied for and approved by your lender and CMHC. Only loans applied for and approved June 1st, 2015 and beyond fall under the new rules.

Special thank you to Laurie Foster of One Link Financial
(204-981-2354 if you would like to contact him)

If you needed help in identifying the right property and getting a list of every single home that fits your criteria both MLS and non MLS (I sell many homes annually through my proprietary “back pocket listings” that only my clients know about) then please contact me anytime at 204-981-1940 (voice or text). Apple users may iMessage me at davidthompson1@shaw.ca

Stay tuned for my next blog coming very soon:
“What’s the Number 1 Question to Ask your Realtor When Selling Your Home”

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Case Study # 5 “COMissionFREE Seller” versus Realtor Marketed Home

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