stacks of coins representing home values

The Differences in Home Value

We often get asked by clients what the value of their home is, however, there are many different answers as to what this truly means! While this may seem confusing at first, we’re here to make sure you have a simple breakdown so you can understand what the variant discrepancies in your home’s “values” are and why! Here are just a few ways your home can be valued:

Fair Market Value
This value is probably the one you are most familiar with and is important to know if you plan on selling. Fair market value is the price both a buyer and seller can agree upon. This value is generally determined by performing a Comparable Market Analysis by a real estate professional. Through this analysis, real estate professionals look at comparable comps in the surrounding market and well as any features in your home that may make it more desirable to home buyers.

Insured Value
This type of value is generally produced for insurance companies and coverage. As a homeowner, having home insurance is crucial in order to protect your assets. In most cases, homeowner policies typically have replacement clauses which include cost of demolition, clean up, new construction, and the added complexities of matching existing construction that could exceed the cost of new construction. This value can be higher or lower than the market value depending on the location of your home and its amenities.

Investment Value
Sometimes when it comes to real estate, owners use it as more of an investment tool than a place of residence. The investment value is created to indicate the income the property can generate during its useful life. This value is dependent on what kind of yield the investor requires to capitalize on the value overtime. How this value is created is by dividing the net operating income by the capitalization rate required by the investor.

Assessed Value
The assessed value of a home is determined by property taxes the owner is required to pay by the responsible state government agency.

When trying to get a comprehensive idea of how much your home is truly worth, it’s important to understand and consider the different values and their definitions. The professionals at Albuquerque’s Team Sedoryk Properties can discuss the differences with you and help you gain a better idea of what your home is worth. For more information, please give us a call at (505) 985-5905.