The WOZ value, or Valuation of Real Estate, is an important figure for every homeowner and resident. This value is the basis for various taxes, such as property tax and the owner-occupied home tax credit. But how is this WOZ value actually determined? In this article, we dive into the methodology and factors involved.
Why is the WOZ value important?
Before going into the calculation, it is good to understand why the WOZ value has such an impact. A higher WOZ value can lead to more taxes and fees, while a lower value can offer benefits. It is therefore useful to understand how this value is arrived at.
Methods of valuation
The WOZ value is usually determined using one of the following methods:
Sale prices
This is the most common method. It involves looking at the sales prices of comparable homes in the neighborhood that have recently sold. The more comparable the homes, the more accurate the estimated WOZ value will be.
Reconstruction value
This is the cost to rebuild a similar property in the same location less a factor for technical and functional obsolescence. This method is more often used for commercial properties than residential.
Factors affecting the WOZ value
There are several factors involved in determining the WOZ value of a property. Some of the most important are:
Location and surroundings
The value of a house is greatly influenced by its location. A house in a popular neighborhood or close to amenities such as schools and stores will usually have a higher WOZ value.
Housing characteristics
Aspects such as the size of the house, number of rooms, and state of repair also play a role. A larger house with a modern kitchen and bathroom will usually have a higher WOZ value than a smaller, outdated house.
Economic situation
The general economic situation can also have an influence. During a period of economic growth, house prices - and thus WOZ values - will usually rise.
Determining WOZ values is a complex process that depends on a multitude of factors. Although the methods used are standardized, there can be significant differences between individual homes. By understanding how this value is arrived at, you will be better prepared to possibly object or strategically market your home.
