You have two choices if your home doesn’t meet Florida’s insurance rules.
How do you sell a home that may need work? To answer this question, we really have to look at what’s happened with homeowners’ insurance in the state of Florida in the last 18 months. We’ve seen some big changes, and the biggest change that we’ve noticed is when a buyer goes to purchase a home, their insurance company sends out a questionnaire and asks three important questions.
Number one, how old is the roof? Number two, how old is the air conditioning? And number three, how old is the water heater? Why do they ask these questions? Well, all three of those house systems can allow moisture into the house if they’re not functioning well. So insurance companies are looking to limit their losses. The way they’re doing this is they require that if a roof is older than 12 years, or if a water heater is older than 15 years, or if an air conditioning system is older than 15 years, they have to be replaced before they’ll write an insurance policy.
“The insurance company sends out a questionnaire and asks three important questions.”
To answer this question, we really need to look at selling a home retail versus as-is. Now, why would you consider selling a home as is? Many of my sellers will do that in this market because they can’t get insurance, or their buyers cannot get insurance on the property because of Florida insurance companies’ rules. What I mean by that is if your roof is older than 12 years, if your air conditioning or water heater is older than 15 years, Florida insurance companies will not even write a policy on that house. Since 80% to 90% of our buyers have to get a mortgage to purchase a home, that lender will require that the buyer has insurance in place. Check the age of your roof. Check the age of your AC, and check the age of your water heater. If they’re all within those parameters, great. You can sell on the retail market. If they’re not, you have one of two choices. Either get them replaced so that you can sell on the retail market, or consider selling your home as is. As is means you’re going to be selling your home to an investor that will make those improvements and expect to make a profit.
Many of my clients like that idea because they can just get an offer, be done, and move on. Some of my clients would prefer to maximize the price; however, they may not have the money to make that improvement. Here are some ideas on getting the money and resources. You can seek it from a family member. You can seek it from a home equity line of credit or, for a short period of time, if you’ve got to get a roof and you’ve got the availability on a credit card, get the roof done. What we’ve seen is you will get two to three times the value of that roof back in your purchase price or sale price simply because you’re opening the market to more buyers.
I know this is a lot of information. If you have questions about whether selling as is or doing some of these improvements is better for you, please contact me. I would be happy to be a resource for all of your real estate needs.
