Everything You Need to Know About How to Calculate Home Replacement Cost

Estimating the replacement cost or rebuild cost of your home can seem like a cumbersome task, but it’s an essential step all homeowners should complete. Here’s everything you need to know about how to calculate replacement cost of your home.

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How Do You Determine Your Home Replacement Cost?

Homeowners often wonder how to calculate the cost to rebuild a house.

Home replacement cost is calculated by gathering the details of your home, and attaching a dollar value to the elements that then translate into a building cost per square foot. This dollar value is not only comprised of material costs, but also factors in labour, inflation, market trends, and conditions, as well as pricing in your specific geographic location.

Why Is It Important to Calculate the Rebuild Value of My Home?

Homeowners often wonder why and when they need to calculate their home rebuild cost. While insurance purposes may be the most common reason to calculate your home’s replacement cost, there are several different reasons that a replacement cost value may be required:

  • Insurance coverage recommendations
  • Settlement of residential insurance claims
  • Financial management
  • Accounting functions
  • Budgeting for new home construction
  • Assisting with obtaining financing
  • Assisting in the settlement of disputes/litigation

How Often Should I Calculate My Home Replacement Cost?

To ensure your home’s replacement cost is accurate, it’s advised that it should be done every few years to accommodate for inflation.  Any time major changes to your home have been completed, such as extensive upgrades or square footage changes, your home’s replacement cost should be recalculated to ensure the true value of your home is accurately captured.

Life Events Where You May Want to Calculate Home Replacement Cost

There are several different life events that you may find require you to calculate your home’s replacement cost, such as:

  1. Purchasing a new insurance policy
  2. Financing your home
  3. Budgeting for an extensive renovation or home expansion

How Do I Estimate the Replacement Cost of My Home?

In addition to replacement cost calculators used by insurance companies, there are a few different ways you can calculate your home’s replacement cost:

1. Insurance Companies or Brokers

Insurance companies can determine this through calculator programs they use to determine your home’s replacement cost. When setting up a new homeowner’s policy your agent or broker will take you through a list of questions about the size, construction and finishes of your home. Based on the responses to these questions, their system will attach a dollar figure to each of the answers that will ultimately lead to your home’s replacement cost.

Of course, leaving your home’s replacement cost up to an unfamiliar system, or a singular entity can also be a bit nerve-wracking. Many choose to explore secondary options to calculate home replacement costs. Trusted online calculators, such as the Douglas Residential Cost Guide, are an excellent way to walk through replacement cost questions at your own pace, see the details first-hand, and get a second opinion on what exactly it would cost to rebuild your home.

2. DIY Method to Calculate your Home Replacement Cost

The DIY method for home replacement cost calculation is the most hands-on option, and what you save financially, you’ll pay for with your time. The DIY method can be a cumbersome task, where you must consider a wide range of factors relating to the construction of your home. It may require you to get in touch with your local homebuilding contractor to determine the building cost per square foot for your geographic area. Multiplying your home’s square footage by the building cost per square foot will give you a basis for your home’s replacement cost.

Additional factors that you may need to consider in order to estimate your home replacement cost is upgraded flooring, cabinets, fixtures and appliances, roofing, and exterior features.

3. Online Home Replacement Cost Calculator

Recognizing that the DYI method is a time-consuming process, many have developed online home replacement cost calculators.  Some are more accurate than others and some are free for use while others charge a small fee. There are various types of online options, some choices pull public information on your house based on your address and geographic location to generate a replacement value, while others ask for specific details of your home and generate a replacement cost based on the information provided.

4. The Douglas Residential Cost Guide

Trusting the source of your selected online home replacement cost calculator is important.  A company with appraisal, insurance and industry experience should be selected to ensure the most accurate calculations. The Douglas Residential Cost Guide has been developed by industry experts with over 30 years of appraisal and valuation experience.  It has been developed by Canadians, for Canadians, using Canadian data, market trends and research. The Douglas Residential Cost Guide is a trusted valuation tool utilized across many industries including financial institutions, lawyers, accountants and numerous corporations. Check out the Douglas Residential Cost Guide today to calculate your home’s replacement cost.

5. Appraiser

Another source for calculating your home’s replacement cost is to have an independent appraiser evaluate your home. An appraiser will complete a thorough examination and inspection of your home documenting the details and taking photos and videos. The appraiser will evaluate everything from floors to ceilings, walls and wall height, foundation, footings, siding, lighting, plumbing, electrical, heating/cooling, square footage and specialty features.  After thoroughly documenting all the details, the appraiser will provide you with your home’s replacement cost value.

What Do I Need to Do to Estimate the Replacement Cost of My House?

Whatever method chosen to calculate the replacement cost of your home; the first step is to gather the proper information to ensure all the details of your home are captured correctly.

What Factors Affect My Home’s Replacement Cost?

Home replacement cost is calculated using a variety of determining factors such as:

  1. The year your house was built is largely important, for estimating Actual Cash Value.
  2. The year of any significant updates, additions, or changes will also be relevant.
  3. The type of plumbing and wiring is also important.
  4. The amperage of electrical service
  5. The square footage of the home
  6. Age of the home
  7. The shape and style of the house
  8. The quality of home fixtures
  9. What type of foundation the home is built on
  10. Does the home have a finished basement or garage?
  11. Any exterior home finishes such as windows, roof, or siding
  12. Furniture and valuable in the home
  13. Are the building codes up-to-date on the home?

Consider the Finishes When Determining Your Home’s Replacement Cost

In addition to all the basics, you’ll need to ensure the finishes are captured correctly. The type of flooring and countertops are considered, the style, type, and the number of windows in the home, as well as the style, type, and number of light fixtures, will all need to be captured. The level of detail may seem overwhelming but armed with your new home’s market listing and a few mental trips through your house will allow you to calculate your home’s replacement cost rather quickly.

Accurately Estimate Your Home Replacement or Rebuild Cost Using the Douglas Residential Cost Guide

Your home’s replacement cost is the cornerstone of home insurance policies and can assist in several different areas.  Ensuring your home’s replacement cost is up-to-date and accurately captured is imperative to ensuring your home is properly protected.  With over 30 years of valuation and appraisal experience in Canada, the Douglas Residential Cost Guide has been specifically designed for Canadian homeowners.  Our leading industry experts have developed a finely-honed valuation system designed to accurately capture Canadian’s home replacement cost in a consumer-friendly format.  Let the Douglas Residential Cost Guide calculate your home’s replacement cost today.