As experienced REALTORs®, it’s up to us to help guide homeowners through the process of selling their homes with transparency and with the client’s best
interest in mind.
Lisa Ash often emphasizes the importance of considering all aspects that may influence a potential homebuyer's decision or ability to purchase a seller’s home. One crucial factor that homeowners might overlook is the impact of prior insurance claims on a new homebuyer's ability to secure an insurance binder and, consequently, affect their ability to close on a home loan.
In this article, we'll explore the key insights and tips to help homeowners navigate this often-overlooked aspect of the home-selling process.
1. Disclose, Disclose, Disclose
One of the cardinal rules when selling a home is transparency. Lisa stresses the significance of disclosing any past insurance claims to potential buyers.
Honesty is key. It not only builds trust between all parties involved, but it also helps avoid potential legal issues down the line.
Full disclosure allows buyers to make informed decisions, and it sets the stage for a smoother transaction.
2. Understand the Impact on Homebuyer's Insurance
Homebuyers are typically required to secure insurance to protect their investment as a condition of a mortgage loan and provide proof of coverage through an issued binder by the insurance company.
Insurance providers assess the risk associated with a property before offering coverage. Previous insurance claims on a property may raise concerns for insurers, potentially impacting the cost and availability of coverage. By understanding this, homeowners can better prepare themselves for conversations with potential buyers and insurance companies.
3. Obtain a Comprehensive Insurance History
Before putting a home on the market, Lisa recommends obtaining a comprehensive insurance history for the property. This document outlines any past insurance claims from their current insurance provider and provides a clearer picture for both the seller and potential buyers.
Armed with this information, homeowners can proactively address concerns and work towards finding solutions that satisfy all parties involved.
4. Mitigate Concerns Through Repairs and Documentation
If prior insurance claims have resulted in visible damage to the property, Lisa advises homeowners to consider addressing these issues before listing the home. Repairing damages and providing documentation of the completed work can go a long way in reassuring potential buyers and their insurers.
This proactive approach demonstrates the seller's commitment to maintaining the property in good condition and assures other insurers and investors that there are no “open” claims on the property.
5. Consult with an Insurance Professional
Navigating the intricacies of insurance claims and their impact on homebuyers can be challenging. Lisa recommends homeowners consult with an insurance professional early in the selling process. These experts can provide valuable insights and guidance on how to address potential concerns, ensuring a smoother transaction.
6. Price the Home Accordingly
Understanding that prior insurance claims may affect a buyer's insurance costs or ability to obtain insurance (a prerequisite of satisfying a mortgage loan). Home sellers should consider pricing their homes accordingly. Pricing a property competitively takes into account all relevant factors, including potential
insurance considerations.
Even cash buyers will be concerned with open insurance claims, so this approach might appeal to buyers who would be more comfortable with the overall cost of making an offer on a home with open insurance claims or work to be completed.
7. Be Open to Negotiation
In real estate transactions, flexibility is key. If a potential buyer raises concerns about prior insurance claims, Lisa recommends being open to negotiation. This may involve adjusting the sale price, offering concessions, or collaborating on a mutually beneficial solution, such as finishing open work claims and providing documentation of such prior to scheduling a closing. A willingness to work together can help overcome potential hurdles and keep the home sale on track.
8. Educate Potential Buyers
Lisa feels educating both parties can further the track of success. She emphasizes the importance of educating potential buyers about the steps they can take to secure affordable insurance coverage, even in the presence of prior insurance claims on a home they’re interested in buying.
Furthermore, when working with home buyers, Team Homes By Ash provides resources and recommendations to reputable insurance providers who can empower buyers to make informed decisions about their home-buying goals. This fosters a positive experience for everyone involved.
At the end of the day, having insurance claims on your home doesn’t mean you can’t sell the home, but unaddressed claims and undisclosed claims could end up unraveling a potential home sale.
By embracing transparency, understanding the concerns of buyers and insurers, and taking proactive measures, homeowners can navigate this aspect of the selling process successfully.
With these tips in mind, sellers can contribute to a smoother transaction, ensuring that their homes find new owners who are well-informed and confident in their purchase.
