How much is an insurance quote worth?

[Corey Davis]

I'm looking at a property fsbo, where the owner is claiming a value of 280k, based on the safeco insurance replacement value of his property. Owner is asking 160k, and I intend to rehab and sell for 225/235k if the value is indeed 280k, that should make this a very good deal for my buyer.

Problem is, I'm 2100 miles away at the moment, and won't be able to view the property until next week. So, my question is, how much of this safeco replacement value can I use to actually value this property? Obviously I'm not going to buy a property I haven't seen, but, I'm not going to fly across the continent unless the insurance value is a very good indication of my projected market value after rehab.

[Donald Stevens]

Replacement cost and market value are two completely different things. There was a time when market value was higher than replacement cost but in todays market that is not the case. Market value is how much it is worth when selling. Replacement cost is a guess at how much it would cost to rebuild the property from the ground up. Different insurance companies may have different tools to determine that value. The replacement cost does not include land value or market value.