Homebuyers can benefit from an independent agent's advice to keep their home offers grounded in reality, particularly in this competitive market. Here are five ways agents can assist.
In the last year and a half, historically low-interest rates helped fuel a surge in the homebuying market and, as a result, eager buyers are making quick decisions in an attempt to make their offer stand out. But that doesn't mean consumers should sacrifice due diligence to close a deal. Insurance agents can provide potential or existing policyholders with impactful insurance value that they otherwise might not receive during the homebuying process.
Even without an overly competitive market, purchasing a home is stressful enough, and homebuyers can benefit from an independent insurance agent's advice to keep their home offers grounded in reality.
Agents should walk prospective homeowners through a variety of insurance topics, including what coverages they might need for the type of homes they are interested in, what to look for regarding claims the sellers made in the past, and the importance of a home inspection.
All of these tips can help the buyer save money in the long term and will help them get the insurance they need rather than overspending for unnecessary coverage options.
Agents know where to look for potential risk in a home. However, buyers might have insurance blind spots or even overlook certain areas to simply close on a house. Education is key and can help prevent buyers from walking into a costly list of repairs or high coverage costs that could've been avoided.
Here are a few ways agents can assist:
1) Schedule a brief call or in-person meeting. This allows an agent to explain how homeowners insurance works, such as what it covers and the different endorsements buyers might need depending on the home or property. The meeting will help the homebuyer understand the exact coverage they will need prior to making an offer and how much the needed coverage will cost them while they make a budget.
Also, a buyer might not know that homeowners insurance is required by mortgage lenders, so sharing this upfront will ensure buyers secure coverage prior to actually securing their mortgage.
2) Review potential endorsements with the buyers. Homeowners coverage and endorsements can be a lot of information to take in at once, so after an initial call or meeting, share any topical content with the buyer via email or social media to keep them in the know.
For example, if the potential home is in an area prone to flooding, an agent can recommend that they get flood insurance from the start, rather than experiencing regret after a flood strikes.
3) Understanding past claims and their impact. Insurance agents know that past claims and losses could have an impact, so advising buyers to request that sellers provide a comprehensive loss underwriting exchange report might be beneficial. This will allow an agent the opportunity to explain how the claims made by the sellers in the past can impact the buyer's premiums.
Also, if a series of similar claims were made by the seller, it might be an increased long-term concern for the insurance company to cover and could raise the overall premium or cause a new challenge in securing the needed coverage.
Walking the buyers through the claims data will help them to better understand some of the potential home challenges that they might face in the future as well as an understanding of the cost behind their premiums.
4) Provide advice on the insurance impact of a home inspection. In an attempt to create a more competitive offer, some homebuyers are waiving a home inspection without considering the potential insurance risk.
Agents can advise homebuyers that if they decide to waive the inspection, an insurance company typically conducts its own thorough inspection as a part of the underwriting process. This process might identify more areas of concern or risk that could end up costing the buyer more money to either remedy issues that arise or to insure the home.
5) Share expertise on the home purchase negotiation process. A buyer might not know or think to ask the seller to address areas of concern as a part of the purchase negotiations. However, your expertise can help guide them in what areas could be a potential risk. For example, advise how the age of a roof could cause overall deterioration, which could lead to leaks or increased shingle loss.
With this knowledge in hand, the homebuyer could negotiate a better purchase price or have the seller remedy the issue, ultimately saving them money in the long run and helping them to get the coverage they need upfront.
As the home buying market remains fast-paced and competitive, now is the time to maintain a communicative and fruitful agent-client relationship to provide the resources the buyer needs throughout every stage of the homebuying process and into homeownership.
As buyers race against the clock and fight the temptation to skip over imperative steps when buying a home, agents have the opportunity—and the responsibility—to emphasize not only the importance of due diligence but of ensuring the protection of the home and those who reside within it. After all, a house is just a house until it becomes a home.
Sally Kressin is vice president of product management at American Modern Insurance Group.