Why does the insurance company think my home is worth more than I can sell it?

 Why does the insurance company think my home is worth more than I can sell it?

 That is an easy question to answer,but it requires us to consider three different values. Each home has three values that are associated.

The first value is the market value. That's the value, if you were going to sell your home, that you could get for it. So we list it, it goes up on the market and you get a buyer. You have agreed to sales price that is the market value. 

We always recommend working with a recognized reputable realtor to help you get that number. They can do a full comparative market analysis. That's something that Zillow can't do.

 The second value that we'll talk about is the appraised value. When you are looking at paying your taxes each year, the County Appraisal District assigns a value to your home. That value determines how much taxes you pay, so while you may want your market value to be as high as it possibly can be, you want your appraised value to be as low as it possibly can be because that's the amount of money that you can have to pay taxes on.

 The third value in the one that matters to the insurance company. It is what's known as replacement cost value. That is the amount of money that would be required to replace your home if it was to be lost completely. A total loss a major claim that money would be there to put the walls back up, the roof back on top, replace the doors, the windows and the whole nine yards.

 You want this amount of money to be appropriate to replace your home back to the standard it was at prior to the claim value. Those three numbers very rarely are exactly the same. That is why the insurance company may say that your home is worth more than the market value. They say this because to actually rebuild it might take more than you could sell it for today.

 I'm Ron that's today's home insurance tip from Insurance for Texans.

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