With all of the commotion around instant offers and digital closings, you’d think that buying a home in 2019 would be as easy as ordering a book from Amazon. It’s not.
Real Estate deals happen because Realtors, Assistants and Transaction Coordinators (TCs) put in a heroic amount of work. It takes a team to drive a deal from on-market to closed. It’s not always glamorous and it doesn’t grab headlines but these individuals are serious about delivering more efficient transactions.
Keeping up with the ever-changing dynamics of transactions is critical. A recent development, affecting buyers and sellers alike, is the increase in natural disasters. Wildfires and floods have put pressure the home insurance industry to tighten the reins; causing stricter policy terms to trickle down into real estate transactions.
Home insurance: How to maneuver for the most certain, expedient, transaction.
Home Buyers, Pay Attention!
Most buyers don’t know that home insurance is a requirement for their mortgage; and even if the buyer is not using a mortgage, it’s a good idea for them to protect their investment with home insurance. Traditionally, buyers wait until they get into contract to start the home insurance process, however, in today’s climate, this is too late.
“insurance was $30,000 a year, which is at least double what it would have been in prior years. The deal ended up falling through.”
“Insurance has become hard to obtain for many homes throughout the country. We’ve seen buyers back out due to the price of home insurance being way more than expected. I just had a transaction where the only available insurance was $30,000 a year for a two million dollar home, which is at least double what it would have been in prior years. The deal ended up falling through.” Adrianne Peixotto, Principal at Newfront Insurance
Some major insurance carriers have stopped covering high-fire-risk areas (like parts of Northern California) and flood zones. If you’re in-contract on a home and the buyer finds out that the home is uninsurable or that the premium is astronomical, it will be a surprise that can throw a wrench into your otherwise would-be smooth transaction.
Pre-quotes Are Necessary
At Disclosures.io, we believe that disclosing as much information about a property as you can pre-offer is the best thing that you can do to drive certainty and efficiency into your deal. For that reason, we are delighted to see a new trend emerging with top producing Realtors. Listing Agents are proactively reaching out to insurance brokers to find out if their listing is insurable and what the ballpark cost would be. They are taking these “pre-quotes” or “indication of insurability” and providing it to interested buyer parties along with the standard disclosures.
“As Realtors, we’ve all seen what’s going on with insurance risk from fires. When a home is not in close proximity to a first response team, the cost to insure can be dramatic and it’s killing deals. We need to understand the insurability of these homes before buyers get involved. That’s why we are putting an indication of insurability into the disclosure package.” - Will Densberger, Realtor in the Napa and Sonoma County Region
“We need to understand the insurability of these homes before buyers get involved. That’s why we are putting an indication of insurability into the disclosure package.” - Will Densberger
The Trend is Real
The practice of disclosing upfront has proven to reduce: time in escrow, buyer credits, negotiation time, buyers cold-feet, and lawsuits. The growing practice, pre-sales inspections and predetermined indication of insurability, helps to provide certainty in the deal. It gives the buyer peace of mind that their home can be insured and they know what the costs would be. Buyers can confidently put their best offer forward.
This is the new standard in real estate and it’s why Disclosures.io exists.