Ask the Insurance Agent – with Kevin Foster from Allstate

KF KeytagA couple of my clients were wondering if certain features of a home would make their insurance premium go up, so I decided to confer with a local expert. There’s nothing more discouraging than loving a home but wondering if something about it is going to bring the sale to a halt. I asked Kevin Foster of Allstate Insurance if there were certain things home shoppers should stay away from. Here’s what he had to say:

“When looking at homes, it may seem like certain items would raise your insurance premiums. Like all other things, it’s never too much trouble to reach out to your local insurance agent to ask them what may or may not be an issue. You could find that something you thought was a problem, is fine after all, or vice versa. In fact, many issues that your insurance provider would find problematic would be something that the appraiser and/or the home inspector would also note. At that point you may either need to move on, or work with said companies to figure out how to rectify the issue. A good example is a swimming pool.

“Some insurers (like Allstate) don’t charge an additional premium for pool owners. However, you would be required to either have the pool fenced in, or have a fence installed around the property itself. This is actually why you see many pool owners with fences.”

If you have an insurance question (or any question about the buying process), please reach out! I’ll help you get it answered.

What to Expect When You’re Inspecting

 

When you work with me as your buyer agent, you will hear me advise you to obtain a home inspection. When I do this, I am looking out for your best interest as my client. Not only should you know the home you’re buying, your loan type likely requires a good report on the quality and safety of the home. It’s your lender’s investment, too.

When it’s time for the general home inspection, you can expect to:

Pay $300-900+ at the time of inspection(s)

Spend 1-2+ hours at the home with your agent and the inspector(s)

Learn something new about your home (and homes in general)

Find something that needs to be fixed

A home inspection is something you pay for as a buyer. It’s an exciting and scary purchase. Not everyone can easily cover the expense of buying a home. The prospect of paying hundreds of dollars to discover a defect with the home you don’t even own yet is not a pleasant one. But the alternative — paying a mortgage on a home with major issues — is far less pleasant.

There are real benefits to obtaining a home inspection. A good home inspector will not only make you aware of defects, they will point out the positive details of your future home. You’ll learn the location, age, and condition of the systems and features of your future home and how to care for and maintain them. For some loan programs, inspection cost can be counted toward the percentage of the purchase amount that you’re required to pay at closing.   

Be aware that different inspectors have different qualifications and different opinions.

It’s best to choose an inspector with multiple certifications and credentials. You want someone with experience and a high rate of customer satisfaction. Inspectors who belong to professional organizations like InterNACHI and ASHI must pay a membership fee and adhere to strict standards of continuing education in order to maintain membership.

What's more serious? Peeling paint or mold?
What’s more serious? Peeling paint or mold?

Home inspectors who have been inspecting for a few years have seen the best and worst. I asked Tiffany Wilber of Inspect All Maine to tell me the worst defect she’s seen during a home inspection. It was “a house that had major issues with the foundation. To the point where you could be on the outside of the house on one side and look straight through the opposite wall of the foundation.” Sometimes, she said, “so much work is needed it is easier to just start over.”

In the rare case that things are that bad, most inspectors will stop the inspection and discuss the magnitude of the problems they are finding rather than waste anyone’s time or money. You will likely only be charged a small travel fee when an inspection is terminated because of defects. But not everything that an inspector warns you about spells doom for your home purchase. All homes need maintenance. And sometimes even more serious issues aren’t as problematic as they seem. Tiffany told me that “most people see mold as a big problem, but I feel mold can be remediated easily. Though there is a cost to do the remediation… actual mold issues can be easily taken care of.”

Though opinions can often vary among home inspectors, Jason Lamoreau of Maine Inspection agrees that mold is really not as big a deal as many people think. “People get really freaked out by mold. That’s all they can think about. They think they’ll get really sick and they have little kids to worry about.” But in Jason’s experience, mold in an attic rarely affects the air quality of the living space below.

“It’s about stack effect,” he explained. “Heat naturally lost from the home is drawing up and escaping out through the ventilation.”

Jason told me people “get so hung up on the mold there, they don’t think about why. When they find levels in the attic like that, they find moisture in the basement or crawl space. Often there’s a lack of a vapor barrier. It’s common to find poor ventilation in the bathroom causing mold in the attic.”  Of course it should be remediated, but “if you don’t solve the issue that created it, it’s just going to come back.”

While his customers are worried about mold and structural issues, they should be more wary of peeling paint. “Everyone knows a roof is really expensive and a septic is really expensive, but they don’t think about the cost associated with painting.” Peeling paint is panned by appraisers for federally backed loan programs like Rural Development, Federal Housing Authority, and VA loans. Cost to paint a house can easily climb up to $20,000 and so a lot of people tend to put it off. But “small chipping and peeling paint spots can lead to big problems,” Jason said. Rotten wood leaves room for water and pest infiltration and can increase heating costs.  

All of this information may be overwhelming you, but rest assured that you won’t need to retain or translate everything by yourself. Inspection reports are often emailed within a few hours of the inspection, and your real estate agent (me!) will help you understand the results and strategize if needed. You should make the time to attend your inspection. Inspectors like Tiffany and Jason will make sure you understand any concerns they have with the structure or systems of your future home.

Urgent: Make That Offer!

51675425_1125100681003756_6831602949844631552_nHere’s one piece of advice about buying property in the current market climate (February 2019):

Don’t 👏sleep 👏 on 👏 that 👏 listing!

You may think that because winter is traditionally slower you won’t face a competitive offer situation or log in one day to see the home you’ve been watching is suddenly pending. You are wrong. It’s happened to a couple of my buyers since the first of the year and it’s hard to recover from.

It’s true that conducting your home search during the winter months can give you an advantage. That’s why savvy home-buyers who know what they want and how they’ll get it are actively shopping during this time. If you find a property in your price range that hits all your major needs, put an offer on that place ASAP. If you need a week or longer to think about it, you’re probably going to lose it. If you’re going to shop on Zillow without a plan, prepare to be heartbroken.  

💔 💔 💔

You can avoid losing to other buyers by having a clear and concise understanding of your property needs and buying ability. Before you look at property, get pre-approved, not just pre-qualified, so you can act quickly with a strong offer when you find the one. Use an agent with energy who has good communication and negotiating skills.

You can prepare yourself for the fast-paced process of purchasing property by reading ahead. I prepared this article/handout for my clients and customers: We’re Under Contract, Now What? To figure out what you really need and want out of a home, fill out my Buyer Preference Worksheet.

Not All Agents Are REALTORSⓇ

OrangeRealtorREALTORSⓇ are governed by a strong code of ethics that respects and protects clients and customers as well as other real estate agents. We must maintain memberships in the local, state, and national REALTORⓇ Associations. Many of us are active members of the community and spend time volunteering, which allows us to better understand the market where we work.

The REALTORⓇ pledge:

I AM A REALTOR®

I Pledge Myself

To strive to be honorable and to abide by the Golden Rule;

To strive to serve well my community, and through it, my country;

To abide by the REALTORS’® Code of Ethics and to strive to conform my conduct to its aspirational ideals;

To act honestly in all real estate dealings;

To protect the individual right of real estate ownership and to widen the opportunity to enjoy it;

To seek better to represent my clients by building my knowledge and competence.

We’re Under Contract, Now What?

Buying a home is a complex process. If you’ve never purchased real estate, you probably don’t know what to expect. This is why it’s a very good idea to use a buyer agent — preferably a REALTOR® (yes, there is a difference!).

The transaction process step-by-step.

UnderContractNowWhatOffer Accepted! You did it! You found a home you love and you’ve reached an agreement with the seller. Once the Purchase and Sale (P&S) contract is signed and dated by both parties and both parties are made aware of this, the contract gets an effective date. This is the date that starts the clock on your EMD and inspection period deadlines.

Earnest Money If you have promised an earnest money deposit (EMD), you’ll need to get your check to the agency holding the EMD in their  trust account by the deadline. By not doing so, you risk the contract being terminated by the seller.

Submit P&S to Lender If you’re financing this purchase with the help of a lender, it’s time to really get to work on your loan. As soon as there is a fully executed P&S, your agent will submit it to the bank or mortgage company and you’ll start checking off the conditions of your financing. Some lenders and loan programs won’t provide a pre-qualification or pre-approval; they’ll want to see a completed P&S before you can start the application process.

Inspection Period Once the contract has an effective date, the clock starts ticking on your inspection period. Also called an investigation period, this is one of the contingency clauses in a P&S contract. Your inspection period is the amount of time you and the seller agree you will have to conduct a variety of investigations of the property. It is absolutely recommended that you hire a trusted professional to inspect the premises. The resulting home inspection report is your property and you decide who is allowed access to the information.

Title & Closing Initiation It’s a good idea to reach out to a title/closing company as soon as possible so they can begin to research the property’s title. This allows time enough to find and address any possible clouds on the title. Most title companies will not charge you for title research until the transaction gets to the closing table.

Inspection Addenda If you found an issue with the home during your inspection period and a solution was negotiated, an addendum will be added to the contract. If the issue is serious enough to affect financing, there won’t be a clear-to-close until it is taken care of. Repairs should be completed before the appraiser comes so that they see the home in its best condition and they won’t need to come back to verify that a repair has been made, which costs you extra money.

Appraisal Your lender will order the appraisal for you. While an inspector looks at the structural integrity and safety of the home for you, an appraiser examines the home and compares it to recent sales in the area to verify its value for the bank. A federally-backed loan will need to pass certain safety guidelines. The appraisal report will come back to the lender. The appraiser will either find that there is sufficient value in the property to support the loan amount, or the price or structure of the financing will need to be renegotiated.

Clear to Close Once the appraisal has been conducted, all contingencies in the contract are completed, and conditions of financing are met, your lender will announce that the loan is “clear to close.” A closing date will be set, and you’ll be on your way to the closing table! TILA-RESPA consumer protection laws dictate that borrowers must receive closing disclosures a full three days before they are allowed to close on the loan. If you’re closing on a Friday, you’ll need to see these on Tuesday.

Closing Table 24 hours before closing, you’ll get a settlement statement with the final total for taxes, prorations, your down payment and loan origination fees, seller concessions, and title search costs. Review this carefully and make sure you ask your agent or title company if you question anything. At the closing table, the title agent will verify your identity with a picture ID. Your EMD will be brought from the trust and applied to your closing costs as a credit. You will bring a certified bank check for the amount due from you. It is always a good idea to bring an extra personal check with you to closing, in case there are any minor last minute adjustments. You will sign mortgage docs, your deed, and other legal documents. Finally, you’ll get the keys to your new home.

I created this graphic of the process to give my buyers an understanding of the timeline from contract to closing. Download it for free here: We’re Under Contract Now What?  

 

Why You Need Buyer Representation (and How I Can Work for Free)

WhyYouNeedRepThe question I hear most from my clients is, “Is this normal?”

In real estate, there is no normal. No two properties are exactly alike. No two property transactions are exactly alike. As your real estate agent, I’m the best resource you have in your home-buying journey. This may be your first or second home purchase, but I’ve guided countless transactions to closing. I have the training and experience to think creatively in tough situations, and I have many contacts throughout the real estate world to call on for help when the going gets tough (or weird).

Buying or selling a home can be an emotional process. Having an objective representative to negotiate and relay information can be crucial to keeping a deal together. I’m your coach, planner, and fixer from start to finish, and I’m there for you even after you have the keys to your new home in hand. The best part? You don’t pay me a dime.

How Can I Work for Free?

I choose not to charge my buyer clients a fee to retain my services. That means you get the benefits of having an agent solely devoted to your needs and interests and it doesn’t cost you a thing. But I don’t work for free. My fee is paid by the listing agency at the closing table. Why?

Here’s some insight into buyer and seller representation: A seller’s agent is the listing agent, and a buyer’s agent is the selling agent. A listing agent is paid to market the home, and they pay me, the selling agent, when I match the property with a buyer. I’m technically selling the home and that’s how I get paid.

If you want to help other first-time homebuyers by sharing wisdom about the process, you can download a print-quality PDF of this article here: Why You Need Buyer Representation

Let’s Talk Titles!

What's the difference between a title and a deed
A deed from the 1900s.

So you’re buying or selling a piece of property and it’s time to choose a closing attorney. The closing attorney helps ensure a smooth transaction by researching the title and preparing the deed.

But wait, what’s the difference between a title and a deed? Aren’t they the same thing? And why research? How long does this take? What does it cost? And can anything go wrong?

I’ve called in Lexi Scott, Account Executive at Gateway Title to help answer these questions. But before we delve into the ins and outs of deed prep and title research with Lexi, let’s quickly look at the difference between a title and a deed.

A title is the “bundle of rights” or “sticks” that comes with owning real estate. It may seem odd, but we use the “bundle” metaphor because these property rights are not all in full effect all of the time for every piece of property. Sticks are removed from the bundle when there is an encumbrance on the property, such as a lien or restriction, or when the property owner gives up subsurface (minerals, oil) or air rights.

A deed, quite simply, is the written proclamation of your rights to a property. I’ll talk more about deed types and the rights they describe in future posts.

Now let’s talk to Lexi about the importance of researching a title and what goes into preparing a deed.

Lexi Scott, Gateway Title

Lexi, what can title research uncover? How long does it take?

A title search is performed to identify the property, establish ownership, and determine any title issues or outstanding liens.  Property records are gathered from the registry of deeds and then thoroughly analyzed by our title examiner. This process can take anywhere from a few days to a couple weeks, depending on the turnover time at the registry. A title search is a vital part of the buying process. A clouded title could present serious issues for the buyer in the future if not uncovered & resolved.

What is a cloud on a title? How can it be resolved?

A cloud (a.k.a. a title issue) is an obstacle that may impact the sale or insurability of title on a property. Some very common issues include: undischarged prior liens or mortgages, ownership irregularities, or faulty foreclosure proceedings. If a property has a title issue, be aware that it may impact the closing date. Some issues extend closings weeks or months if the matter is complicated. If the seller has title insurance, it can certainly expedite the curative process.

The steps to resolution vary depending on the matter at hand. When Market Street discovers a title issue, it is immediately communicated in writing. Steps to “cure” the issue are clearly outlined in an accompanying letter. One the issue is resolved, title is considered clear.

What does all of this cost?

The cost varies depending on the nature of the transaction. Our free mobile app Liberty TitleAgent One [iOS/Android] provides a prompt, easy way to estimate total title closing costs, title insurance, transfer tax, etc. Simply fill in the basic transaction information and it instantly generates a quote.

Are there ever times issues can’t be resolved?

Sometimes title issues require a lengthy and/or expensive legal process to clear. This can be very time consuming, especially when the seller does not have title insurance. In some situations, “exceptions” to the title policy can be made and the transaction can be cleared to close.

When does a deed get prepared? What goes into that?

Once the property description (also referred to as the Exhibit A) is verified, the deed is prepared. The deed identifies the seller’s claim to the subject property and conveys ownership to the buyer.  This document is signed by the seller at closing and is recorded at the registry of deeds. The original copy of the deed is returned to the buyer after recording. It is very important for all parties to thoroughly review the legal description to confirm & accept the property being conveyed.


Connecting you with a title company that suits your needs is a courtesy provided by me, your real estate agent. Do you have a question about titles or other real estate related matters? Let’s talk!