"4 point inspections are now required on 30 year old home? Roof condition reports are required on 25 year old homes? I thought these inspections were mandatory only on 50 year old homes! The insurance definition of older homes is getting younger and my sellers and buyers are feeling the difference!"
Realtors are learning first hand that selling a home today and keeping the deal together is much harder than ever before. Not only will the home inspection report be important, but also the new buyer's ability to obtain good homeowners' insurance based on the inspection findings and more importantly, the new insurance inspection requirements. What was once acceptable for a home inspector to disclose for real estate needs, may now no longer be!
Homeowners insurance in Florida has always been a daunting task, but some of the more recent industry changes have made it even more challenging, especially for the older homes or the new older home, 25 years and up. Polybutylene, Chinese Drywall, older roof coverings, Federal Pacific Electrical Panels, Cloth-Knob and Tube wiring, open flame heat sources are all just a few of the insurance buzz words that are coming back to haunt many today. These issues can cause a deal to go south faster than the flick of a switch, mespecially for the ill-prepared buyer or Realtor requesting insurance coverage right before closing and expecting either the seller or the buyer to make alst minute updates or agreements to fix or replace major components of the home. Add to this the new flood certificate insurance requirements for thsoe homeowners in the flood zones, and Realtors' heads are spinning. You may be wondering, how do I prepare my clients!
Insurance carriers will typically require a 4 Point Inspection when homes are in excess of 25 years or a roof survey for homes with older roofs. The four point inspection or survey, will include an assessment of the roof covering, electrical system, HVAC and the plumbing components, to make sure there is no undue risk to the homeowner or insurer. This age requirement will vary depending on the insurance carrier but the concept is the same - Are the main four compnents of the home relatively safe and in good condition?
Most insurance carriers will require a remaining functional roof life of at least three years before they will write the insurance policy. Homes that are for sale with roof coverings 14-16 years old therefore are at risk for early replacement, depending on roof slope, type of covering and the aging process! This may and has resulted in some roofs being replaced before the end of functional life, just to facilitate insurance coverage.
These presence of polybutylene piping or Federal Pacific panel will warrant replacement prior to closing unless the new buyer is willing to pay higher insurance rates or use a secondary insurance market. None of these make for a happy seller or buyer especially in today's market and all result in some for of contract re-negotiations.
I hear you say, the current owner has insurance, why can't the new owner get the same? The fact is many times homes are grandfathered to the new underwriting guidelines, and as such may not be subject to such rigorous inspections and requirements. The same home has also aged and now may be a higher insurance risk than before.
Proactive Realtors are changing the way they do business because of these insurance changes. It all starts with the listing agent, who is responsible for getting the home ready for sale.
By understanding the insurance bottlenecks and having the necessary insurance inspections complete will prevent unwarranted issues and surprises. If you are a listing agent representing a seller do not use a non real estate inspector! To achieve an inspection report that is designed to protect both the seller and buyer, you must hire and inspector that understands both insurance and real estate transactions and can prepare expectations for all.
If performed at time of listing, this report will not only act as a marketing tool but also help the seller prepare the home from a condition and property disclosure perspective.
For the buyer's agent, make sure your home inspector completes all necessary inspections at the time of inspection, in order to prevent delays with insurance coverage for closing. Realtors managing the sellers and buyers expectations upfront, as they relate to insurance requirements will in most cases, remove the headaches, risks and delays down line, all of which lead to an easier closing transaction.
This in many cases, particularly for newer homes or homes with new roof coverings, will result in additional insurance discounts, which may offset the additional cost of older home insurance. Discounts will vary, and depend on each home. We have witnessed insurance discounts on applicable homes from as low as $100 as high as $1000 per year in NE Florida.
With each wind mitigation certification lasting 5 years these savings can be substantial. Discounts for each home will vary and homeowners should talk with their inspector on the benefits of having a wind mitigation inspection.
Inspection Depot Inc. has been providing inspection services since 1999, and has worked with thousands of homeowners over the years. Inspection Depot is currently and Approved Inspection Provider for many insurance carriers, including Tower Hill, Security First Insurance, Universal Property and Casualty, Citizens Property Insurance Corporation and more. For more information or tow schedule an inspection please call 1 888 589 2112.