Valuing Property: Why Market Value?

Why do you assess properties at market value?

According to the Nova Scotia Assessment Act, all properties must be assessed at market value. The market value approach to assessment is the most equitable and widely accepted system in North America. Every province in Canada uses this approach, as do most assessment jurisdictions in the United States and 127 other countries.

Market value is widely accepted for the following reasons:

• It is easily understood by most property owners
• It is a transparent process, allowing property owners to test fairness
• It is objectively determined and equitably applied to property owners.

Market Value

Market value is the amount of money that probably would be arrived at through fair negotiations between a willing buyer and a willing seller. Consideration is also given to the uses the property may be put. The following characteristics of market value should be noted:

• is the most probable price, not the highest, lowest or average price
• is expressed in terms of money
• implies a reasonable time to be exposed to the market
• implies that both the buyer and seller are informed of the uses to which the property may be put
• assumes an arm’s-length transaction in the open market
• assumes a willing buyer and a willing seller with no advantage being taken by either buyer or seller
• recognizes both the present use and the potential use of the property

How is market value determined?

When establishing the market value for a particular property, NS Assessment considers the same characteristics as a purchaser. They include the size, layout, shape, age, finish, quality, number of carports, garages, sundecks and condition of buildings. Available services, location, views and neighbourhood may also influence a property's market value.

NS Assessment assessors are aware of all real estate sales within their area, and analyze them to develop common units of comparison and corresponding values. When using this appraisal technique (i.e., comparing the selling price of properties) NS Assessment is careful to consider each property's unique characteristics. Assessors review the differences as well as the similarities to arrive at a fair assessed value for a particular property. In Nova Scotia all properties are assessed at market value as of a specific base date.

When might a property's value change?

Real estate market forces have the biggest effect on market values. These forces vary from year to year, and from property to property. Other reasons might include new construction or renovation such as adding on decks and garages.