#### The WOZ value

How is the WOZ value determined? The WOZ value is estimated by a tax official using a computer program. The system looks at various characteristics of your immovable property, or your home. For example, the system asks the following questions about your home:

- What is the surface area of the house?
- Does the house have dormer windows?
- Does the house have a garage?
- Is the house detached?
- In which region is the house located?

In reality this list is many times longer so that an estimate can be made as accurately as possible of the WOZ value. Ultimately, a computer tries to estimate the value of your home. However, the correct valuation of the homes is in practice a lot more difficult, which means that many mistakes are made. We will give a number of examples why estimating values is so difficult.

#### Incorrect estimate

Why is estimating the value of a home so difficult? As you can imagine, almost no home is the same. The house may differ on the outside or be arranged differently. The neighbor may have installed a dormer window on his roof and you may not. The neighbour's house should be worth more than your house because of this dormer if all other characteristics are the same. If your home and your neighbor's home are subsequently appraised, we know what the dormer window adds to the value of the home. Since this is complicated, let's try to show it using the following table:

House A | Value (€) | House B | Value (€) |
---|---|---|---|

Surface area: 100m² | 100.000 | Surface area: 100m² | 100.000 |

Property type: detached | 200.000 | Property type: detached | 200.000 |

Postal code: 1234AB | 50.000 | Postal code: 1234AB | 50.000 |

Garage: yes (one) | 10.000 | Garage: yes (one) | 10.000 |

Dormer window: no | 0 | Dormer window: yes (one) | ? |

Taxation value: | 360.000 | Taxation value: | 370.000 |

*The values used are only indicative and may differ from reality.*

Because the appraised value of the house is known, we can calculate the value of the dormer window. We see that the appraised value for house B is €10,000 higher than house A. This means, if all other characteristics remain equal, that a dormer in our example adds €10,000 of value to a house. But you will wonder how we know the value of 100m² surface. That is a valid question. The value of the area is estimated in the same way as the value of the dormer window. The computer program that estimates the values therefore needs many different homes to know the exact value of your home. Unfortunately, computers make many mistakes in this. It can happen that the house is valued too low, but the opposite is also possible: the house is wrongly valued too high. This can also be the case with you, which means that you may pay too much tax. **Appeal for free**.

#### Training a computer system

Ultimately, a computer system determines most of the values of buildings in the Netherlands. However, the computers must first be 'trained' by various valuation reports before the system can give an accurate result. However, this training must be done very carefully with many different valuation reports. Such training could look like this:

Surface area (m²) | Garage | Postal code area | Estimated value (computer) | Taxation value (government official) |
---|---|---|---|---|

100 | 1 | 5100 | € 290.000 | € 300.000 |

200 | 1 | 5200 | € 400.000 | € 380.000 |

120 | 0 | 5300 | € 320.000 | € 325.000 |

150 | 0 | 5200 | € 330.000 | € 300.000 |

*The values used are only indicative and may differ from reality.*

In practice, we often see that the estimated value of the computer system deviates from the appraised value. This is only normal because the computer system gives an estimate based on other buildings. This often contains a certain deviation. The system tries to make this deviation as small as possible so that the model becomes as accurate as possible. However, this is very difficult because the value of your home depends on many aspects. In the example we only use the surface area, whether the house has a garage and the zip code area. In reality, the value of your home also depends on many other things that the computer cannot see and therefore cannot include in an estimate of the value of your home. The following figure shows how the deviation of the actual value and the estimated value by a computer can differ.

In the image above you can see a number of things. The individual dots represent the value of different houses. The blue line is a trend line that charts the trend of the individual dots. This blue line is the regression line. This line is calculated by computers using complex mathematical models. The red dotted line is the deviation between the trend line and the true value. The computer will follow the trend line to assign a value to your property. The house can be worth more or less in real life. The red dotted line therefore indicates the size of the difference between the value of the computer and the real well-valued WOZ value.

#### Not a perfect estimate

We can see in the image that in the end hardly any house has been perfectly valued by the computer. All values are not on the trend line, but below or above it. If the dot is below the trend line, your home is valued higher than it is actually worth. The opposite is true for the dots above the trend line.

This is difficult stuff to understand. However, what you should take away from it is that the estimate of the tax officer with a computer is not always correct. The tax official tries to make the red lines as small as possible so that the value corresponds most closely, but that is not always possible. There is a good chance that your home is not valued properly. However, this does not mean that your home always has a WOZ value that is too high. It is also possible that your home is valued too low. If you object to the WOZ value, your home cannot be valued higher, so you do not have to pay more tax. Because of this, you can never get worse from an objection. Want to know why? **Click here for an article on the matter**.

#### Conclusion

We have seen in the above explanation that the value of your home can never be estimated perfectly. It often happens that your home is valued too high, but your home can also be valued too low. Because it is difficult to explain how the tax officer estimates the WOZ value using a model, we tried to explain it as briefly and as well as possible. It should be noted that this is not the full picture. There is of course much more to models that estimate your WOZ value. That is precisely why it is difficult for citizens to understand how the WOZ value has come about. After all, there remains a 'black box'. No one except the tax authorities and municipalities therefore knows how the WOZ value is estimated exactly.

Questions or remarks? **contact us.** We will gladly assist you.