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Redemption value higher than sale value - home insurance

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  • 11-01-2017 11:50am
    #1
    Mink
    Registered Users Posts: 2,260 ✭✭✭


    We are near closing on a property and we got the valuation done. The redemption value (ie how much it would cost to rebuild if house was destroyed) is coming out 40k more than what we are actually buying the house for.

    It's a 4 bed semi built in 2008.

    Is this unusual? For some reason I had it in my head that it would be closer to the value.


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    #2
    Denny_Crane
    Closed Accounts Posts: 384 ✭✭Denny_Crane


    Not sure if unusual but it was certainly the other way around for me. The rebuild cost was significantly lower than the purchase cost. You already have the land after all.


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    #3
    coffeyt
    Registered Users Posts: 304 ✭✭coffeyt


    I think a lot will depend on the location and the purchase price. We purchased in 2015 and our rebuild cost on our insurance is also about €40,000 above the purchase price.


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    #4
    Mink
    Registered Users Posts: 2,260 ✭✭✭Mink


    Thanks, yes I think it's cos we're not buying in the most desirable of areas - well it's desirable to us! That's put my mind at ease


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    #5
    Duffryman
    Banned (with Prison Access) Posts: 547 ✭✭✭Duffryman


    Part of what they factor in is the demolition and removal cost - i.e. what it would cost to take down and take away whatever remains of a burnt-out house, before you even get to start to re-build. Obviously this is a cost you wouldn't face if you were just starting to build on a new site, and so it can put the redemption value above the 'ordinary' buy or build value. We faced the same thing ourselves.


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    #6
    Fian
    Registered Users Posts: 2,192 ✭✭✭Fian


    This is exactly why there is a property supply issue - build cost is more than the market value of property.


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    #7
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    Fian wrote: »
    This is exactly why there is a property supply issue - build cost is more than the market value of property.

    Well thats what the builders keep saying. They seem happy enough though to build houses slowly at a loss though, nice of them to do that.


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