Today’s lesson is homeowners insurance 101: what it is, why you need it for a mortgage and how much it is.
Homeowners insurance (also called home insurance or property insurance) covers several things:
- Property damage (pretty self-explanatory)
- Personal property loss (for example if your house is burglarized or damaged due to an event that’s covered by your insurance)
- Personal liability (if someone is hurt on your property or if you’re responsible for property damage or injury due to negligence)
What you receive in compensation completely depends on the damage done and the limits that are spelled out in your policy. When it comes to personal property, items like jewelry and cash on-hand typically have limits, but you can increase the limits with additional premiums.
So really, homeowners insurance is a safety net. If your house is damaged or completely destroyed, it can be difficult to make those costly repairs or possibly rebuild out-of-pocket.
Most states (like Washington) don’t require you to have homeowners insurance IF you own your home outright. However, if you are among the many who get a mortgage, your lender will require homeowners coverage. That’s because technically your mortgage company is part owner of the house and they need to protect its value.
As far as natural events go, standard insurance typically covers fire, wind, snow and sleet. A few natural events usually require additional coverage, such as flooding and earthquakes. That’s why if you live in a floodplain your lender will more than likely require additional coverage.
The cost of homeowners insurance is usually based upon the value of your property. Washington has one of the lowest rates in the nation. The national average is $1,288 while Washington’s average is $653. Spokane is right around $600. States prone to natural disasters (eg Florida, Oklahoma, Alabama) have premiums right around $3,000.
If you’re buying a new home and already have homeowners insurance through a provider with your current home, you can work with them to transfer coverage to your new house. If you don’t currently have homeowners insurance or if you’re a first time homebuyer, your lender can find and assign you one. I recommend doing some checking around with different companies and getting quotes. If your car insurance provider also provides homeowners insurance, you can bundle it and typically get a discounted price for both.
If you need to get setup with an insurance agent to chat with, let me know. I have a few recommendations that I can send your way.
You’ve heard the news: it’s a seller’s market and homes are flying off the shelves. You decided to list your house, but its been on the market for a few weeks now with no offers and only a handful of showings. Why is that? Here are some reasons your house might not be selling as quickly as you thought it would.
This is the number one reason a house sits on the market for longer that it should. Homes sell when they are priced correctly and a house is only worth what a buyer is willing to pay for it. It doesn’t matter what price tag you slap on it. When you list your house for $10,000 dollars above what it should be listed at, you’re not going to get any offers. Just because it’s a seller’s market, the sky is not the limit, and it can be a costly mistake to assume so. Say for example your agent says your house could sell for $225k-235k. So you decide to push the envelope to $250k. Well, you’re going to miss out on your key market: buyers looking to spend about $230,000, which is where your house really should be priced at. They won’t even look at a $250k house because it’s too expensive for them. Buyers who ARE looking for a home at $250k are going to compare your should-be-$230k house to other homes at $250k and dismiss your house because it isn’t up to par to the others. So it sits there. By the time you reduce your price to where you should be, buyers assume there’s a reason it’s been on the market for so long, and they won’t pursue it. I can’t stress the importance of pricing right enough. It is impossible to list too low right now in this market. There are so many buyers competing for each listing, meaning if it is low? It will get in a pricing war and get bid up to where it should be. However, it is VERY possible to list too high.
Your house could need a little (or a lot) of TLC. I know it’s hard to pay for home improvements that you may not enjoy for long, but if you want to sell for full price your house need to be in a condition that warrants it. If the bathtub is dripping or there’s a hole in a wall you’ve always been meaning to patch? Fix it. Buyers will see any repairs as time and money they don’t want to spend. You also need to clean your house from top to bottom. Every window sill, wall and cabinet needs to be wiped down. Dust the blinds and the fan. Touch up any paint chips. Scrub that tub. Don’t allow a buyer to turn up their nose and pass on your house just because it isn’t clean. Oh, last thing… if you have a perpetual smell in your house – you HAVE to address. Whether it’s smoke or pets or mold…you need to get rid of the smell before opening it up to buyers. That is one guaranteed way for a buyer to leave just as soon as they walked in.
When 95% of buyers start their search online and decide whether or not to come see your house based on a quick skim – your pictures need to be top notch. If there aren’t many of them or they weren’t taken by a professional, chances are most buyers will say “pass.” Make sure your house is listed on all the major website: realtor dot com, zillow, trulia, brokerage sites. Have your agent hold an open house. Each agent has their own marketing plan: ask yours what he/she is doing to actively market your home.
If you’re getting frustrated with the time you’ve been on the market, make sure to chat with your agent about it. Maybe your agent has an answer, or they can suggest a new way to market it or recommend a price adjustment. It’s something to have a serious conversation with them about and make sure your concerns are heard.
Life just seems to slow down during fall time in the Pacific Northwest. Here are a few local day trips that are fun for the whole family:
It’s all about harvest time up at Green Bluff right now. Green Bluff is a grower’s association of about three dozen family farms (plus many more vendors and shops), sitting on 12 square miles just north of Spokane. You can pick your own produce, enjoy food from some of the best food trucks around, and experience all sorts of activities for the kiddos.
The Apple Festival is a huge draw. It’s every weekend in September and October, featuring every kind of apple imaginable available for picking, freshly-pressed cider, and of course caramel apples. Another big draw during the fall? The many pumpkin patches. Pick your perfect pumpkin, enjoy a hay ride and wait in a ridiculously long line for pumpkin donuts: it’s worth it!
Next up, take a couple hour trek to Sandpoint for the day! Known for gorgeous views of Lake Pend Oreille and Schweitzer Mountain, this can be a wonderful weekend getaway. It’s not quite skiing or boarding time, but you can still get active on the mountain by going for a hike or a bike ride. Plus, shopping in Downtown Sandpoint or the Sandpoint Shopping District won’t disappoint! If some down time is more your style, enjoy a beer at one of Sandpoint’s craft breweries.
Scenic Pend Oreille River Train
And finally: head to Newport to hop on a train! The Newport and Priest River Rotary Club runs a family-friendly scenic train ride that runs most weekends until the end of October. The Scenic Pend Oreille River Train heads along the Pend Oreille River, while the crew tells the history of the area: from Native Americans to fur trappers, gold rushers and gamblers. The trip’s about an hour and a half roundtrip. Make sure to book in advance, though, as there are only a couple weekends left! Tickets are $15 for children and seniors and $20 for adults. Head to SPORTtrainrides.com to check out available dates and book your tickets.
Some neighborhoods have this little thing called a homeowners association. Some people believe HOAs are a helpful organization to keep everything in the neighborhood uniform and looking its best. Others see them as an annoying $200-ish bill you have to pay to have someone tell you what you can’t do to your own property. Today we’re exploring what an HOA actually is, where your money usually goes, and what could happen if you were to stop paying the bill.
If you make an offer on a home that has an HOA in place, you’ll eventully get these papers called “covenants, conditions, and restrictions” or CC&Rs. When you sign on your house, you’re also signing off on these CC&Rs – promising to abide by them. It’s the HOA’s job to monitor homes and make sure everyone’s following the rules. Those CC&Rs can cover everything from the color of your house, to the type of fencing you can put up, and even the breed of your dog. They can require you to have a tree in your front yard or a certain type of curtains on street-facing windows. The goal of an HOA isn’t to be annoying or micromanage people, but just to make sure the neighborhood keeps its “look” – if you will.
HOAs also maintain common areas. For instance, if there’s a community swimming pool and the heater breaks…someone has to pay for that, and that’s where the HOA comes into play. Sometimes they hire out to maintain parks or plow the neighborhood’s streets, they may cover city service’s like water, sewer and garbage, or manage the neighborhood’s security system and gate.
Typically HOAs are about $100-200 a month, but they can be as low as $200 a year. The price typically depends on the services the HOA offers. Members of an HOA are usually charged a bit more than the monthly expenses, so that a reserve can be built up, in case of an emergency or big-ticket items.
If you get fed up with the HOA and start breaking rules or stop paying dues, you could get hit with a big fine, sued, a lien may be put on the home or it may even be foreclosed on.
HOAs aren’t for everyone. So before you make an offer on a home that has an HOA in place, look over those CC&Rs and make sure you are okay with everything your HOA will do and monitor.
So you want a house that is 2,000 square feet – but does that include the garage? How about the unfinished basement? Or the attic? Today we’re diving in to what’s included in square footage and what isn’t.
How square footage is typically measured by an appraiser:
- Measure the shell of the house from the outside (just the first story)
- If the second or third stories are the same footprint as the first? Easy, double or triple it. If they aren’t? Then they measure the interior of those stories, adjust for the thickness of walls
- Then remove spaces that don’t count as living space
- And add that all up
What’s “livable space”?
Here are some examples of what doesn’t count:
- Below grade spaces (most basements, finished or not)
- Garages (even if it’s attached)
- Outside buildings (sheds, guest houses and pool houses)
- Porches or decks
There are usually two square footage components on a listing: assessed and approximate. Assessed is what the assessor or an appraiser deems as square footage. Approximate square footage is really anything that makes up the house, so a basement could count in this scenario.
If you are thinking about putting your house on the market and are not sure where your square footage stands, ask your agent. They should be able to help you figure out what counts and what doesn’t.
SPOKANE, Wash. – For years, it seemed the millennial generation was content paying rent and living in urban areas. But earlier this year, reports showed more and more professionals in their 20s and 30s are putting down roots in neighborhoods.
“I’d like to remove all of this. Maybe put in some flowers,” explained Megan Tollefson, as she gestured toward her new front yard.
Tollefson has some big plans for her Central Spokane property. The 23-year-old gets the keys to her first home Thursday.
“I’m excited,” said the recent EWU grad. “I’m excited to make it my own, paint it how I want it. Put my decorations and stuff like that in.”
If you think Megan is unusually young to buy a house – you’re half right. Megan is young, but more and more people her age are committing to real estate.
According to the US Census Bureau, 36 percent of every American under the age of 35 owns their own home; a dramatic increase from just last year, when the percentage was 34.7 percent for the same age group.
With that information – the Spokane market makes a little more sense. In the first quarter of 2018, nearly 1,500 homes were sold. The same three month stretch in 2017 saw just over 1,200 sold- all while the median sales price continues to climb.
“I think a lot of people, especially because of social media, a lot of people are starting to realize how important investing in real estate is,” explained Alyssa Curnutt. “That’s why I think you’re seeing the trend start at a younger age.”
Alyssa should know – she’s a 27-year-old real estate agent, and a homeowner herself.
“I’m definitely kind of the younger generation, but that’s why I can relate a lot to first time buyers. I’ve been in their shoes. I know how stressful it can be, but it’s a good thing.”
Not only is Megan a 23-year-old homeowner, but in a matter of weeks she’ll become a landlord once her friends move in. She may not realize it – but the new homeowner is setting quite a positive example for her tenants.
“They think that it’s just outlandish for them, however when i start talking numbers to them and how much my down payment was, it seems like a viable option for them as well.”
Full story: http://bit.ly/AlyssaCurnuttKXLY
Before listing your house, there are always things to do: a little paint, get the carpets shampooed, clean every nook and cranny, etc. But there are additional things you can do to wow potential buyers and maybe even get some extra dough. Here are some small updates with major returns:
This is where people love to spend their time and gather. Kitchen renovations are always good and I’m not talking a complete overhaul/remodel. Updating the appliances, painting the cabinets and even updating the hardware on those cabinets will go a long way.
Bathroom updates are next on the high-returns list. Re-grouting the tile and updating the hardware will go a long way in making your home look top-notch.
Curb appeal is huge because first impressions are everything in the real estate world. Put down some fresh mulch. Repair or replace missing or cracked stepping stones. Give the front door a fresh coat of paint. Make buyers really excited to step into your house. Oh, and a good power wash goes a LONG way. The exterior of your house goes through a lot out in the elements. Make it sparkle and shine with a good spray down.
Buyers typically just want a home that is move-in-ready and doesn’t scream “fix me immediately”. Taking care of anything unsightly or that seems like you didn’t care about the place is a must. Before you do anything major, though, check with your agent to get their thoughts on what you’ll get back on resale.
When listing your house and trying to figure out the “magic price,” a lot of people assume they should list higher than what they’d like to get because they can just come down in price. In other words “leave some room for negotiations.” We’re diving into why that is not the best technique and can actually end up costing you more money.
When a house is priced well, it will sell quickly and close to the listing price. If you go 10- 15,000 higher than you should, your house is likely going to sit on the the market for awhile – until the price comes down. If you adjust your price after your house has been on the market for 30 days, there go 30 really precious days. Especially in a high-demand seller’s market (like we have today), buyers will look a house that has been on the market for a month or two and assume “something must be wrong with it.” That translates to less showings, less offers and (likely) a signed around offer below listing price.
Think about it this way: almost all homebuyers start their search online. If they are looking for homes between $250 and 275k, but yours is listed at $300k (when it should be $275k), those buyers (exactly who you are looking for!) aren’t going to see your home or even know it’s on the market! And someone who is looking for a house between $300k and $325k? They are going to see your house and compare it to others for $300k – quickly determining that your house for $300k isn’t quite up to par to the others. They will eliminate yours from the running. That means your home won’t appeal to that higher price range and the people who DO want your house won’t even see it.
Generally, you’ll get the most activity the first two or three weeks your on the market. Even following a price adjustment, a house will lose its interest and buzz much beyond then. Trust me, you will know if your house is priced too high.The general rule is: if you have less than 10 showings in 10 days, you’re likely too high and should talk with your agent about readjusting the price. If you have a lot of showings but no offers, your agent should be able to contact the other agents who have shown it to get some feedback.
When a house isn’t selling, it usually boils down to two things: price and the condition.
This week is about the value of houses. What is the assessed value, what’s market value and what is the appraisal value…and why are they all different numbers?!
The market value is whatever a buyer is willing to pay for something. When you first decide to sell your house and you hire an agent, the agent will put together a CMA (comparative market analysis). This will determine what similar houses in your area have sold for lately and what the market says you can likely get for yours. You could put your house on the market for whatever price you want, but if no one is willing to pay that much for it, that value isn’t the market value.
The banks hire out an appraiser to make sure the loan they are giving out is an appropriate amount of money for what the house is worth. The appraiser determines the appraised value. It’s an unbiased estimate, separate from the listing or negotiated price. Sometimes this value will be the exact same as the market value, other times it’s radically different. If it’s lower than what a buyer offered, the bank will only loan out the appraised value. If it comes to that, there are a few options: the buyer will need to come up with the difference, the seller will have to drop the purchase price to the appraised value or they will have to meet somewhere in the middle. The latter is usually the case. In a today’s hot seller’s market, this is becoming a common problem.
And finally, the assessed value. It’s only used for tax purposes. They take the assessed value of your home – per a county assessor – and multiple that number by the local tax rate to determine yearly taxes. The assessed value of your home does nothing to affect what your home is worth on the market. It could be a whole lot higher or a whole lot less.