What is the value of my house?
The age old question which is often misunderstood…How much is my house worth. The answer is not necessarily as simple as the question. Perhaps the answer is “it depends on who you ask….” Below is an attempt to make sense of it all.
The taxable value of your house can be and usually is based on a value determined by the county in which you live. Everyone in Minnesota has to pay taxes based on the value of their land and the structure sitting on it. This valuation, while often debated or contested, is used to produce revenue for the city, county, and/or state.
The appraised value of your house may best answer the question of what is my house worth. This figure takes into account where your house is located, square footage, year built, and several other characteristics that are desired by a home buyer. The next step is to compare your house with those nearby that are similar in size and the several other characteristics. The concept of “comparable” houses is now introduced. In other words, what did your neighbor’s house, which is similar to yours, sell for last summer? At times, the comparable home dictates what your house is worth. Keep in mind your house may only be worth what buyers are willing to pay.
The replacement value of a home is the valuation method used in the insurance industry when figuring the cost to rebuild. In essence, the insurance company is determining how much money contractor would charge or need to build your house from the ground up. Characteristics such as year built, number of bedrooms and bathrooms, finished square footage, and the overall quality of your construction all play a major roll. The purpose of insurance is to return your home back to pre-loss condition in the event of a claim. Having an accurate and unbiased amount is very important in providing the best and most appropriate coverage during a potentially adverse situation. The value of the land is excluded from this calculation.
Adam E. Weinblatt, LUTCF
Lead Sales Representative, License # IN20500656
Liberty Mutual Insurance
701 Xenia Ave. S. Ste 400, Minneapolis, MN 55416
(763) 543-4344 Ext. 55240
(800) 649-0956 Ext. 55240
Fax: (763) 595-8618