What is Your Home Worth? It Depends on Why You Want to Know!
How Do You Determine Your Home’s Value?
Fair Market Value
Fair market value is the price a buyer and seller can agree upon assuming both are knowledgeable, willing, and without pressure from extraordinary events. This value is generally indicated by the comparable market analysis done by real estate professionals–the CMA.
Insured value is used to determine the proper insurance coverage. Replacement cost could actually exceed the cost of new construction when additional expenses are incurred for demolition and the added complexities of matching existing construction.
Protect Yourself from Being Under-Insured
Homeowners are generally more familiar with their home’s market value than its insured value. Since it can be lower than the replacement cost, owners should review the insured value with their property insurance agents periodically. Under-insuring could invoke a co-insurance clause that may limit the settlement and increase your out of pocket expenses.