BVS Valuation Services - Blog

Why Your Municipal Value Isn’t Your Market Value

Wed, 25 Mar 2026 10:39:13 +0200

A practical guide for homeowners, attorneys, and accountants

Municipal values create more confusion than almost any other number in property. They look official, they appear on rates bills, and they feel like they should reflect what a property is “worth.” But they don’t — and relying on them can lead to costly mistakes in transactions, legal matters, and financial reporting.

This guide explains, in clear and practical terms, why municipal values differ from market value, and why professional valuations remain essential when accuracy matters.

What Are Municipal Values Actually Designed For?

Municipal values exist for one purpose: to calculate property rates and taxes. They are not designed to guide selling prices, purchase decisions, divorce settlements, deceased estates, financial reporting, bank lending, or capital gains tax calculations. Municipalities use a mass appraisal system, which means properties are grouped and valued in bulk. It’s efficient for billing millions of properties — but it’s not always precise.

Why Municipal Values Rarely Match Market Value

They are updated infrequently. Most municipalities update their valuation rolls every 3–5 years. In a market where prices can shift significantly in 12 months, a multi-year gap guarantees a mismatch.
The municipal value is determined one year before a valuation roll is implemented. By the second year of the roll, the values in use are therefore already approximately three years old. Given how frequently property markets fluctuate, this makes the municipal value an unreliable indicator of current market value.
No internal inspection. Municipal valuers do not enter properties. They cannot assess renovations, extensions, structural issues, illegal improvements, quality of finishes, or maintenance levels. Two neighbouring homes can have identical municipal values — even if one is newly renovated and the other needs major repairs.
They rely on limited data. Municipalities use broad datasets, often outdated or incomplete. They do not analyse recent comparable sales, zoning changes, servitudes, encroachments, development potential, or income streams. Market value requires this level of detail. Municipal values do not.
They apply generalised assumptions. Mass appraisal models assume “typical” properties. But many properties are not typical: sectional title units with unique layouts, homes with unrecorded improvements, properties with views or premium locations, irregular stands, or specialised buildings. Market value depends on specifics. Municipal value depends on averages.

Real-World Examples Where Municipal Values Mislead

Sectional Title Units: A block may have 40 units with the same municipal value — despite major differences in floor level, views, upgrades, or parking.

Properties with Improvements Not on Record: If you’ve added a room, renovated a kitchen, or built a cottage, the municipality may not know. Your municipal value stays the same; your market value doesn’t.

Properties with Defects: Municipal values don’t reflect damp, structural cracks, roof issues, or boundary disputes. Market value does — and buyers certainly do.

Agricultural or Development Land: Municipal values often ignore zoning potential, subdivision rights, or income generation. These factors can dramatically shift market value.

Why You Shouldn’t Use Municipal Value in Legal or Financial Matters

For attorneys and accountants, municipal values create unnecessary risk. Inaccurate numbers lead to disputes in deceased estates, unfair settlements in divorce matters, incorrect CGT calculations, misstatements in financial reporting, unrealistic expectations in property sales, and delays in bank finance. A municipal value is not defensible in court, in negotiations, or in compliance documentation. A professional valuation is.

When You Should Get a Professional Valuation?

A formal valuation is essential when accuracy affects money, compliance, or legal outcomes. This includes selling or buying a property, divorce proceedings, deceased estates, financial reporting, tax calculations, business valuations, bank lending, and disputes or litigation. A professional valuation reflects current market conditions, property-specific characteristics, and verified data — not a mass-produced estimate.

FAQ: Why Can’t Valuers Use the Municipal Value?

Municipal values are prepared for rating and taxation purposes using mass appraisal models and limited property‑specific information. They are not based on a detailed inspection or a property‑specific analysis of comparable sales or income performance. As a result, municipal values are not regarded as reliable market evidence and cannot be used as a substitute for market value in a formal valuation report.

Final Thought

Municipal values serve a purpose — but that purpose is not determining what your property is worth. When accuracy matters, when money is on the line, or when legal compliance is required, a professional valuation is the only reliable standard.

Slowbilisation: A Snail's Pace in a Fast-Moving World

Fri, 03 May 2024 09:59:03 +0200

In the fast-paced world of globalization, where borders seem as thin as a sheet of paper and the global market is just a click away, there's a new trend creeping up – 'Slowbilisation'. This term, coined by the "snails" of the business world, refers to the slowing down of globalization. It's not that the world is putting on the brakes, but rather, taking a leisurely Sunday drive in the global economy.

The world is gradually shifting into a new economic mindset where markets are steering away from rapidly interconnected economies and focusing more on local resilience and sourcing. This major shift has most recently been apparent in the disconnect between market expectations and realities that have played out in global interest rates which are sitting at 17-year highs.

Similar situations in the past have resulted in aggressive rate cuts by central banks around the world to spur growth – yet this time, reactions have been more tempered and moderate, with rate cuts seen to be following a gradual path over the next 12 to 24 months.

The Tortoise and the Hare: A Global Tale

Remember the story of the tortoise and the hare? Globalization was the hare, sprinting ahead, connecting markets and cultures at breakneck speeds. 'Slowbilisation' is the tortoise, reminding us that sometimes, slower can be better. It's about quality over quantity, connections over transactions, and sustainability over speed.

Why the Slow Down?

Several factors contribute to ‘Slowbilisation’. Economic nationalism is on the rise, with countries looking inward, focusing on their own growth rather than international trade. Technological advancements, while connecting us, also allow for local customization, meaning we don't have to look far for what we need. And let's not forget that the world is still reeling from a global pandemic that put international travel and trade on pause.

It reflects growing reservations about open trade and the ramifications of geopolitical tensions. This trend marks a departure from the global interdependence that once defined economic and social paradigms, advocating instead for a more localised, sustainable, and resilient approach to development,” according to Francois Stofberg, Senior Economist at Efficient Wealth and a viewpoint shared by the Investec chief economist Annabel Bishop.

The Impact of ‘Slowbilisation’.

So, what does this mean for the global economy? For starters, it's getting a little less crowded. Companies are rethinking supply chains, consumers are looking to buy locally, and the digital nomad lifestyle is becoming more of a digital homebody reality. But it's not all bad news. ‘Slowbilisation’ encourages sustainable practices, supports local economies, and fosters a sense of community.

In Conclusion:

‘Slowbilisation’ isn't about stopping progress; it's about being mindful of how we move forward. It's the world taking a deep breath, looking around, and deciding to enjoy the journey, not just the destination. So, next time you're feeling the need for speed, remember: even in a global economy, slow and steady can win the race.

On the lighter side

Why did Slowbilisation become popular? Because it wanted to make a global change, but at a pace that everyone could keep up with!

What do you call a world where 'Slowbilisation' reigns supreme? A snail's paradise - where everyone has the time to stop and smell the roses, even if they're imported.

Sources

(1) What is Globalization: The Concept, Causes, and Consequences. https://www.managementstudyhq.com/globalization-the-concept- causes-and-consequences.html.

(2) Globalization: The Concept, Causes, and Consequences | PIIE. https://www.piie.com/commentary/speeches-papers/globalization-concept-causes-and-consequences.

(3) What Is Globalization? - PIIE. https://www.piie.com/microsites/globalization/what-is-globalization.

(4) Globalization - National Geographic Society. https://www.nationalgeographic.org/encyclopedia/globalization/.

(5) Globalization | Examples, Impact, & Pros and Cons | Britannica Money. https://www.britannica.com/money/globalization.

Debunking Common Valuation Myths

Tue, 20 Feb 2024 14:57:44 +0200

Sometimes we need to set the record straight and inform the uninformed, or simply share a nugget of wisdom. I’ve collated some of the most common myths that are found on the internet and shared some of my own insights. I’ve done this hoping that you as a property owner may gain a better understanding of the world of property.

The value of my property can only increase!

Surprise, this is not true! Much like capital and investment markets, the property market also fluctuates as it operates in an open market. While a decline in value is less common, it does occur. Some of the reasons why the value of a property might decrease include:

Urban Decay in my experience is one of the most common causes of a decrease in property value. It is the decay and deterioration of an urban area due to neglect or age.
High-risk areas that are prone to natural disasters.
Excessive listings in an area.
A less desirable economic climate or increases in interest rates, higher taxes etc.
Deferred property maintenance which means more capital expenditure is required for repairs thus deducting from value.
A change in the neighbourhood demographic.
A change in the proximity to amenities or facilities.
Increased levels of crime.
A less desirable kerb appeal.
Functional obsolescence.

The bigger my property, the higher the value.

A larger 6-bedroom home will not necessarily achieve a higher value compared with a 3-bedroom home in the same area. The building configuration would need to fit into market expectations. Ever wonder why that large house down the road has been on the market for years?

Commercial properties are similarly affected by market expectations. A large warehouse rental might stand vacant for some time in an area where the market demand is for smaller mini-factories. What is typically seen is that tenant installation/retention comes at the expense of rental income. This directly impacts the bottom line and in turn the overall value. Reduced income equals lower value.

The value of renovations proportionately increases the value of a property.

One of the most ridiculous things I’ve seen as a Valuer is another “Professional” Valuer telling a homeowner, and in writing, that if they spend X amount on improvements, the value of the home will increase proportionately. No, it doesn’t work like that - we look at the current market trends in the area which dictate a potential value range. A discerning Valuer may include a small premium for the renovations. Have a look at our blog on Property Valuer Misconceptions.

The value of a property is the same as its Replacement Cost.

This is not true, the Replacement Cost is the amount that it would cost to rebuild or reproduce a property with the same or similar materials and specifications. This is usually the amount for which the property is insured. The value on the other hand is the amount that a property is worth on the open market. The Replacement Cost and value may differ due to various reasons such as physical depreciation, and obsolescence whether in terms of functionality or utility. In most instances, the Replacement Cost of a property is higher than its market value. This applies to both commercial and residential properties.

Commercial property value is fixed and stable.

The value of a commercial property can change over time due to various factors. Picture a retail centre and consider for a moment that the investment-grade anchor tenant won’t be renewing their lease agreement due to relocation plans. This will directly impact the risk considerations made in the valuation calculation. It is one of the reasons why commercial property values are periodically reviewed.

This is clearly not an exhaustive list, but it highlights some of the more common myths out here. What are the most common valuation myths you’ve come across?

Understanding the Discounted Cash Flow

Thu, 08 Feb 2024 16:07:01 +0200

When I was a young Valuer in training, the Discounted Cash Flow Method always seemed to be so intimidating. The mere mention of it still makes me cringe to this day. This despite having mastered it, pun intended, through a masters programme (MSc Real Estate) some years back. To put my mind at ease, I figured why not write more about the topic so that whenever I feel a cringe coming along, I can refer to my blog and see that it is in fact not as intimidating as I had once thought it to be.

The Discounted Cash Flow (DCF) is a valuation method that falls under the Income Approach as defined in the International Valuation Standards (IVS) Framework. The method is applied to a wide range of asset types/classes. It is a vital concept and can be regarded as the most important of all the techniques used in the finance industry.

The method encompasses determining present values, future values and analysing unequal and equal cash flow streams. This is done to determine the various financial measures of return.

When is it Used?

The DCF method can be used to value most assets that generate a cash flow. It may provide a better indication of value than other methods where:

The asset or business is experiencing significant growth or has yet to reach a mature level of operation. Examples include new business ventures or an investment property under construction (e.g. include hospitality, retail centres, filling stations etc).
Cash flows are likely to fluctuate from period to period in the short term, e.g. fluctuations to rental income generated by an investment property due to leasing terms and conditions or to a business’ income because of cyclical changes in demand for its products; or
The asset has a limited life, e.g. assets and businesses in the energy and natural resource sector.

Principles of this Method:

The value of any asset is a reflection of the present value of the net benefits expected to be derived from that asset as of the specified valuation date. Although there are distinct terms and inputs used when applying the DCF method to valuations of real property and businesses, the basic principles of the method are the same.

The DCF method results in an indication of value whereby forecasted cash flows are discounted back to the date of valuation, resulting in a present value of the asset or business. A terminal value at the end of the explicit forecast period is then determined and that value is also discounted back to the valuation date to give an overall value for the asset or business.

Key inputs that are required for this method:

Determination of the explicit period over which the cash flows will be forecast;
Cash flow forecast for that period;
The asset or business value at the end of the forecast period, i.e. the terminal value; and,
The appropriate discount rate to apply to the forecasted future cash flows which includes the terminal value.

The duration of the forecast period requires careful consideration and is normally determined by one or more of the following criteria:

Where cash flows are likely to fluctuate, the length of time for which changes in the cash flow can be reasonably predicted.
The length of time to enable the business or asset to achieve a stabilised level of earnings;
The life of the asset; or
The intended holding period of the asset.

The selection criteria will depend upon the purpose of the valuation, the nature of the asset, the information available and the requirements of the valuation. For an asset with a short life it is more likely to be both possible and relevant to project cash flows over its entire life.

For some asset types there may be an accepted norm among market participants regarding the length of the forecast period which is typically the basis for market value.

The period over which an asset is intended to be held may be the most appropriate factor in determining the explicit forecast period if the objective of the valuation is to determine its investment value.

Property Valuer Misconceptions

Thu, 01 Feb 2024 08:46:49 +0200

It happens more often than not when people ask me what I do for a living. “I’m a Property Valuer.” … “Oh, you sell houses” is generally the typical response or they immediately go “How much is my house worth?” No, we are not real estate agents or property brokers neither do we thumb-suck values. Neither are we mystical beings with supernatural powers of assessment.

The valuation process is somewhat more complex as Property Valuers look at prevailing market trends and conduct an analysis based on elements of comparability. Essentially this means that we look at the potential to substitute one property for another.

Imagine if you will, two neighbouring homes located in a new housing development, each identical in terms of layout and internal finishes. Essentially there is no difference between the two, apart from being situated on neighbouring stands. The differences in this instance would therefore be considered negligible and a prudent buyer would not likely pay more for one than the other.

As Property Valuers, it is our job to determine what potential selling price these homes might achieve by analysing the prevailing market trends of similar substitutes at the time of the valuation. Where there are differences, the Valuer might consider an upward or downward adjustment (this will be addressed in a future blog). For commercial and specialised properties the process of analysis and elements of comparability become far more complex as various approaches and methodologies may be required however, the underlying principle remains the same.

While this example is rudimentary it provides the underlying principle of what a Property Valuer does.

If you are a Property Valuer, I would like to know what other misconceptions you have come across.