Don’t wait to have a home insured



This experience occurred some time ago, but I run into so many buyers and other agents who have never heard of this that I think it’s worth revisiting.

We had a buyer under contract and set to close on a bank-owned foreclosure.

Of course, with foreclosures you have the ability to perform an inspection, but typically they are purchased as-is.

Banks usually won’t make repairs unless something very serious is found.

Prior to the closing, one of the last things on a buyer’s list that usually gets done is lining up their homeowners insurance.

Getting insurance is a simple as making a call to your insurance agent and providing some basic information on the home.

So, by the time buyers get around to contacting their insurer, we are well past all the due-diligence and contingency periods.

Needless to say, the buyers were surprised when the buyer’s insurer told them that there was a previous claim on the property for a new roof, which was paid out to the previous owner.

No proof of repair was ever provided to the insurance company, so the claim was still “open.” Because of this, the buyer’s insurer said there was pre-existing damage that had been paid on and they would not insure the home.

That’s right. They would not insure the home.

After checking with other insurance providers, we realized that this was the answer we were going to get everywhere.

The bank, as you can imagine, gave us a quick one-word response to our request for them to put a new roof on — no.

So, we’re past all contingencies, we can’t back out and keep our earnest money and my buyers can’t put insurance on the home unless they replace the roof themselves.

Ultimately the insurance company agreed to provide insurance as long as the repairs were completed within 60 days of closing.

We negotiated to get the bank to pay for half the cost of the roof.

While our buyers weren’t expecting to pay for a new roof just days from closing and the bank originally told us they wouldn’t pay anything — half the roof cost became a pretty big victory.


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