Which Value Do You Want?

Often when asked to help someone sell their home, or just sit and visit, the value ends up being staying in Denver, versus moving across town or to another state. Your decision may be based upon the estimated value that I can provide you, and that may even suffice for an estate! So when you are thinking it might be time to move, a conversation about real estate might be the best way to determine what the plans really are. But read on, there's more...

What your home is worth depends on why you ask the question. It could be one value based on a purchase or sale and an entirely different value for insurance purposes.

Fair market value is the price a buyer and seller can agree upon assuming both are knowledgeable, willing and unpressured by extraordinary events. This value is generally indicated by a comparable market analysis done by real estate professionals.

Insured value is determined for insurance coverage. Homeowner policies typically have replacement clauses in them and the cost of demolition, new construction and the added complexities of matching existing construction could exceed the cost of new construction.

Investment value is based on the income it can generate during its useful life. This value is dependent on what kind of yield an investor requires to capitalize the value over time. The formula for this is to divide net operating income by the capitalization rate required by the investor.

The assessed value of a home is used to determine the property taxes the owner must pay. This value is determined by the responsible state government agency.

Homeowners are generally more familiar with their home’s market value. Since it can be lower than the replacement cost, owners should review the insured value with their property insurance agent periodically.

There can be a surprising difference in each of these separate values. It is important to know the purpose that it is going to be used for the value.

Due to my level of experience I am often asked to establish a value for a home here in Denver that is being managed by an estate or a trust, and they need to liquidate. A divorce can be another reason to get a value for a home as can the blending of 2 families, or the expansion of another. I have even estimated value for an un-developed oil & gas lease in the DJ Basin. Life as a Realtor here in Denver can be very diverse. So Have a conversation about real estate.