What is your home really worth?
It depends where you look…
We have found that some of our clients are frustrated when they see 3 totally different numbers throughout the year regarding their home “worth”.
Here are the 3 numbers you will see as a homeowner:
- Market value of your home which is what you purchased your home for or what you could sell your home for today if you put it up for sale
- Replacement cost of your home which is listed on your insurance policy
- Assessed value of your home which is what the property appraiser says your home is worth
So, why 3 numbers and why are the different?
They all serve a different purpose.
As we saw with the home boom in the 2000’s, home prices (market value of homes) sky rocketed.
The replacement cost of homes (what it would cost to rebuild the home if it were destroyed) has also been increasing year after year…the cost of labor and materials are what drives these costs.
For example, a roof that cost $10,000 10 years ago to replace may cost $20,000 today simply because of the cost of petroleum has increased so much. This cost is higher than what you see home builders building homes for brand new because additional factors are taken into an account after a claim. For example, you may have to level and remove the existing structure and if it is after a disaster, the cost of labor and materials will soar.
Call us today to complete a Replacement Cost Estimate on your home to ensure you are insured properly.
Remember, you want to insure for replacement cost, not market value!