Uninsurable?

As building costs, fraud, and risk from wildfires and other climate disasters continue to rise, some insurance companies are backing away from issuing new homeowner policies in the Golden State. What does this mean for potential buyers and sellers?

CHIC (Pearl)

If you’re thinking of buying a home in California, you should get a head start on finding a home insurer who will give you a good policy at an affordable rate before making an offer. Understanding your annual expenses is a key factor in determining how high you’re willing to go.

GEEK (Kevin)

Insurance companies aren’t nonprofits, and they’re not stupid either. They already know the risks of insuring properties in earthquake country, and the recent trend of wildfires hasn’t made the equation any more favorable to them. In other words, don’t hate the player, Hate the game!

Title Contingency

Contingency is a clause buyers include when making an offer on a home that allows them to back out of the deal without losing their deposit if the conditions of the clause aren’t met. So what is a title contingency, and should you include one in your offer?

CHIC (Pearl)

Title contingency protects a buyer against fraud by ensuring the seller is legally authorized to list the property. Imagine going through the whole purchasing process, including negotiation, offers, bidding wars, loan agreements, inspections, and more, only to find out the property isn’t available after all. Sounds like a good idea to me!

GEEK (Kevin)

Title contingency may sound great, but it’s actually redundant in California. That’s because when you buy a home here, either the seller or buyer are required to get title insurance, which clears any clouds around the ownership question. Typically a title check is also performed during escrow, so there are multiple protections for buyers.

Chic vs. Geek: Home Warranty

A client who bought a house last year asked us if it was worth it to invest in a home warranty. Here’s what we told them…

CHIC (Pearl)

You don’t know what you don’t know, which is why it makes sense to buy a home warranty when you move into a new house. You never know what unexpected trouble is lurking below the surface. Like insurance, a warranty gives homeowners peace of mind, However, buyers need to take the time to closely review the different types of coverage described in the contract and understand the limitations. Premiums, exclusions, and caps on benefits can vary widely. Buyer beware! (Cue spooky Halloween music)

GEEK (Kevin)

From personal experience as a homeowner, after living in the house for a while, you’ll get to know what works, what doesn’t, and what really needs fixing. Like Pearl suggests, you could pay annual home warranty premiums to get some peace of mind. Or you could consider saving extra dollars in an emergency fund for unexpected expenses that arise after you move in. Depending on your household budget, it may be a better option than paying premiums to cover repairs that may never be needed.

Chic vs. Geek: Homeowner’s Title Insurance

When you buy a home, Santa Clara County and most jurisdictions require you to purchase an insurance policy on your title, aka homeowner’s title insurance. While it may seem like an additional burden, you never know when you’re going to need it, and it’s important to know what it covers — and what it doesn’t!

CHIC (PEARL)

Even after your real estate company conducts a title search and explores all the publicly available details about a property, there is still a risk that new problems will arise. Title insurance can provide you with security against things like ownership claims from other parties including undisclosed heirs, flawed public records, false signatures on documents, including fraud and forgery, outstanding liens and lawsuits, judgments or encumbrances, and unrecorded easements or other restrictive covenants that reduce a property’s value.

GEEK (KEVIN)

As you can see from Pearl’s take, title insurance covers a lot, but it isn’t cheap, so it’s good to know where it comes up short. You won’t get any protection against infestations from termites and other pests, mold and mildew, fire or weather damage, underground fuel tanks (this comes up more often than you’d think), or any issues not caused by the previous homeowners. Depending on your location and the insurer, fire and storm coverage may be included in your homeowner’s insurance policy or offered as an add-on.

Chic vs. Geek: Title Insurance

Buying a home can be a risky endeavor, and that’s before you close the deal! Can investing in title insurance help you avoid a sticky situation? Let’s take a look…

CHIC (PEARL)

You may find after you purchase the property that someone else has a claim to all or a share of the title. Or perhaps you learn that a neighbor or your HOA have an easement that allows them to use your land — and limit your use of it! Title insurance can safeguard you against these surprises and give you some peace of mind that you’re the sole proprietor of the property.

GEEK (KEVIN)

One of the more common stumbling blocks with taking over the title on a home is finding out that the property is not up to code or has unpermitted improvements. Sorting this out could cost you time and money and headaches dealing with the assessor’s office and your local tax collector. So don’t cut corners on your home purchase. Invest in title insurance!