What your home is worth depends on why you ask the question. It could be one value based on a purchase or sale and an entirely different value for insurance purposes.
Fair market value is the price a buyer and seller can agree upon assuming both are knowledgeable, willing and unpressured by extraordinary events. This value is generally indicated by a comparable market analysis done by real estate professionals.
Insured value is determined for insurance coverage. Homeowner policies typically have replacement clauses in them and the cost of demolition, new construction and the added complexities of matching existing construction could exceed the cost of new construction.
Investment value is based on the income it can generate during its useful life. This value is dependent on what kind of yield an investor requires to capitalize the value over time. The formula for this is to divide net operating income by the capitalization rate required by the investor.
The assessed value of a home is used to determine the property taxes the owner must pay. This value is determined by the responsible state government agency.
Homeowners are generally more familiar with their home’s market value. Since it can be lower than the replacement cost, owners should review the insured value with their property insurance agent periodically.
There can be a surprising difference in each of these separate values. It is important to know the purpose that it is going to be used for the value.
All my best,
Myra Spano, REALTOR®
About the Author:
is a service and results oriented real estate agent with her client’s goals as top priority. Myra has over 10 years of experience and is recognized as a top producing agent in her office in Virginia Beach and enjoys working with both buyers and those selling their homes.
For information about purchasing a home in Coastal Virginia, visit her website
. This site is focused on homes available for sale in Hampton Roads, Virginia. Email, call or text to make an appointment begin your home search
If you are considering selling your home in Virginia Beach or one of the surrounding areas, visit the seller’s website to request a Free Market Analysis
of your property.
Myra Spano & Berkshire Hathaway HomeServices Towne Realty is awaiting to provide the real estate guidance you need. Contact us now to make your home dreams come true!