Tax Assessment, Insurnace Appraisal, and FMV??

The insurance appraisal is how much it would cost to rebuild the home, from demolition of the debris of the old home (for example, if it burned down), to adding in all the features (granite countertops if it has them, cabinetry, etc).  This usually stays pretty consistent from year to year with some added for inflation when building costs rise.

The market value is how much someone is willing to pay for your home - that fluctuates with the housing market, and can change from year to year (or month to month, in this market).

Tax assessors value someone else will have to explain for you =)

In most states the towns are supposed to have all properties appraised by a specialist appraisal company and the taxes are then calculated based on the value. In New Jersey, at least, this is supposed to take place every 10 years so the assesed rate you quote could be nearly 10 years old and hence the big disparity.

Since this is done by an indipendant entity with no axe to grind it can be a useful tool for comparing values of one house to another especially in older neighborhoods.

Here tax assesments often come in at 50%-60% of real value. When people from other areas come here they are often taken back but appreciative. It takes a little explaining but we don't complain.

You should also know that insurance value usually only covers the costs to rebuild what you had previously, not what it costs to bring it up to code.

For example, my house is 100 years old so certain things are grandfathered in.  Like, I'm not required to have GFCI sockets.  If my house were completely burned down, insurance would only cover the rebuild of the old electrical system but the village would require I rebuild with the updated sockets which could cost more than insurance would cover.

writeagain - that's not true for most GOOD insurance companies. You may want to check your policy.  There will usually be an endorsement for "Law and Ordinance Coverage", which is for building code updates in the case of a loss.

A good insurance policy will also have you at 120% replacement cost (or 125, 150, whatever, depending on the state), which means if your home is insured for, say, $200,000, you would be eligible for up to $240,000 in case building costs go up due to a catastrophic loss (like if there was a big storm that did a lot of damage in the area), and other incidentals.

writeagain, being that your home is over 100 years old, some companies do have special policies for that that you can get - basically YOU pick what you want the home insured for, and that's what you'll be paid in the case of a claim. You definitely want to know what kind of policy you have, and don't skimp on coverage just to pay a lower premium.

I can't vouch for any other companies than the one I work for, but I know when we run our program to determine reconstruction cost on older homes (100+) it is usually very high because of just what you mentioned - bringing the home up to code in the case of a loss. A home that is worth $200,000 may have a $300,000 or $400,000 reconstruction value because of the cost of bringing the home up to code. This scares people off, they don't want to pay the premium for that amount of coverage, and end up going with a local company that will cover the home for the lower value - and then when they do have a loss, they are sitting there with sometimes hundreds of dollars less than they need to rebuild their home.

also FYI to all.   look at your contents coverages.   some policies cover 20% and others cover alot more.  make sure you read this line of your policy and make sure it is accurate before it;s too late.

My home was built in 1822 and is covered to be replaced to current standards (likely to be lesser) and code.

jkonstant - wow, in 1822? What kind of house is it? Did you restore it, or just renovate? Was it a farmhouse type home or one of those rambling victorian ones? Have you found anything interesting in the walls?

In my parents' home, when they remodeled, they found old newspapers from the late 1800's, a menu (the front of their home had been an ice cream parlour), and a ladies dance card. It was really fascinating.