What's your home worth?  That simple question has more than one answer.  It depends on who's asking and what they want to know.  Your home's three price tags are based on its market, replacement and property tax values. It's important that you know each one.


This is the most commonly referenced calculation of your home's value.  It's the price a buyer would pay for your home in today's housing market, no matter what you paid for it or how much you've added in updates and upgrades. 

Why it's important to know.  If you're planning to sell your house, market value is what you hope to get for it.  It might be lower than you'd like, and you might not have as much leverage against a buyer who wants to negotiate, but it's where you need to start.  An experienced agent can gather information on the selling prices of similar homes in your area which will help you set reasonable expectations for your home's selling price. 

You should also know the market value so you can calculate how much equity you have in your home.  Home equity is calculated by subtracting the amount you owe on your home from its market value.  Today, most lenders will allow you to borrow up to 70-80% of the appraised value of your equity using a home equity line of credit or home equity loan.


In the event of a total loss, replacement cost helps you rebuild your home based on current construction costs in your area.  Replacement value can include the additional cost of tearing down and hauling away the old structure. 

Why it's important to know.  Replacement value is the number that insurance companies use to determine the amount of dwelling coverage needed in your homeowners policy.  As building costs go up, it's important for your home to be adequately protected with homeowner's insurance.  It's possible to see building costs increase while market values decline which can lead to a situation where you actually need more dwellling coverage, despite seeing your home's value drop.  Having one's home damaged or destroyed is a tragic event, but not having enough money to rebuild makes it even worse.


This is the number used by taxing authorities to calculate your property tax bill.  A given home may be taxed by more than one jurisdiction (hospitals and school districts) and each may apply its own math.  Typically, property tax values are meant to approximate the market value.

Why it's important to know.  The property tax value of your home is going to drive your property tax bill.  Sometimes there's a big discrepancy between the property tax assessment and the market value.  If the property tax value of a home exceeds the market value, consider contesting the value with your taxing authority to reduce your tax bill.