Definition of "Book value"

Book value is a quintessential term used in the financial world and the real estate business. Though, there are slight differences in its interpretation in these two areas of expertise.

Book value in finance

You’ll find the most common use of the term ‘book value’ in insurance. Generally, specialists calculate book value based on depreciable property assets. Depreciable personal properties and goods have long-term value, such as buildings, equipment, and furniture. Accountants would call a firm’s assets book values from inventory, stocks, and even markers and staples employees use.

Typically, more lasting assets, for instance, money and real estate, don’t need to be considered when estimating the book value. These are not susceptible to devaluation.

Book value in real estate

Let’s suppose you once purchased a property. In this case, the book value coincides with the real estate’s original price. Now, if you wish to sell it, its value may have changed in the meantime. So, the resale value depends on your area’s current real estate trends. You won’t find its current value until you sell it or have a home appraisal

Book value vs. market value

In other words, book value defines a property’s net worth as shown on the balance sheet or statement of net worth until the final sale takes place. Besides, a real estate’s book value equals the gross cost less accumulated depreciation. Let’s remind you: the book value has been established based on a property’s historical worth, and it differs from its actual market value! What house buyers are willing to pay determines your home’s market value in the present.

Turn to an expert!

To find out more about your house’s book value, you can turn to an appraiser to provide you with a home appraisal. Also, contact a real estate agent to obtain an expert’s advice. They will offer you a recommendation on a private property’s value. Thus, you can discover whether it’s worth renting, buying, or selling a place under the current housing market circumstances!

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

A building having one house hold on the first floor and a second household on the second floor. ...

Tax term describing current and necessary business expenses. Ordinary and necessary business expenses do not include long-term capital losses. For example, the XYZ stationary store deducts ...

Site where mobile homes are located. Mobile home parks are often mandated by municipal zoning laws. They provide necessary utilities to the mobile homes often including recreational ...

A lease requiring tenants to pay all utilities, insurance, taxes, and maintenance costs. ...

The first mortgage on property when other mortgages exist as well, as in the case of a wraparound loan. For example, the total amount financed might be %200,000 of which the first lien is ...

Glass containing wire support to make it stronger. There is less chance of glass being broken into pieces and hurting people. ...

Additional tax liability that the IRS deems to be owed by a taxpayer. A taxpayer can argue the correctness of a deficiency with the IRS. There can be an appeal to the Tax Court without ...

Clause in a mortgage that allows the borrower to pay more than the monthly amount and to retire the loan early without a penalty. ...

Body o law relating directly to condominiums and cooperative developments. Most property law provides vertical ownership of property in the sense that property owners own mineral rights as ...

Popular Real Estate Questions