What is My Home Worth? – Market Value vs. Insured Value

All owners of Northern Virginia real estate are interested in knowing the actual value of their home. What your home is worth depends on what you intend to do with the information. There may be one value based on a purchase or sale, and a completely different value determined for insurance purposes.

Fair market value is the expected price a buyer and seller can agree upon in the current market, excluding extraordinary events. This value is generally indicated by the comparable market analysis done by real estate professionals.

Insured value is determined for the proper insurance coverage. In this value, you must consider replacement cost, which could possibly exceed the cost of new construction. You should factor in additional expenses for demolition and the cost of matching existing construction.

Homeowners are usually more familiar with their home’s market value, and not quite as aware of the insured replacement cost value. Since insured value can be more than market value, owners should review the insured value with their property insurance agents periodically. Under-insuring your home could require a co-insurance clause that could limit the settlement and increase out of pocket expenses. Check your insurance policy today for your Northern Virginia real estate.

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