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You never know when your home might get damaged in a flood, fire or other disaster. And you can’t rule out the possibility of a home break-in, either. Ideally, you’ll have homeowners or renters insurance in place to cover your damaged or stolen items. But it’s best to have an extensive list of your belongings before they’re damaged or stolen. That’s where a home inventory comes in.
A home inventory is a comprehensive list of your personal belongings, along with their monetary value. While you don’t have to list every single item you own as part of your inventory, you should include all items of significant value.
Your insurance company may not require you to have a home inventory, but it’s a helpful thing to have nonetheless. If your home is subject to damage or a break-in, the last thing you’ll want to have to do after the fact is rack your brain trying to figure out which items of yours were impacted. With a home inventory, you will have an easier time getting at that information. That could, in turn, make it easier to file a claim against your insurance policy, and also, get paid on your claim much sooner.
Furthermore, if your home is damaged in the course of a major storm, you may be eligible for local or federal assistance. Having a record of your damaged goods could help you quality for the maximum amount of aid and help you move forward more quickly.
“Having a loss in your home can be very stressful,” says Jennifer Brault, AVP, Claims Property Personal Lines at Nationwide. “This is a good way to restore and put your life back together faster during that time.”
Plus, according to Pat Howard, a licensed property and casualty insurance expert at Policygenius, “A home inventory also helps ensure you’re purchasing the right amount of home or renters insurance coverage and accounting for items that require additional coverage, like an art collection.”
Your home inventory should include everything you own of substantial value. There’s no specific threshold for what that entails, but generally speaking, you don’t want to list every $20 item you own, but you may want to list items costing $100 or more.
Some of the items you may want to list include:
Once you narrow down your list of items to include, you should record each item’s:
If you have receipts documenting your purchases, it pays to retain them. Brault adds that capturing items’ brands and serial numbers can be especially helpful when it comes to electronics.
The first step in conducting a home inventory is deciding how you want to keep a record of your belongings. Here are some options to consider:
A written inventory. Using a notebook or spreadsheet, you can create a comprehensive list of the items you own, along with details such as purchase date and value.
A digital inventory. There are a host of home inventory apps you can use to compile your data digitally. Many of these are free, though some limit you to a certain number of items before imposing a fee. Last year, the National Association of Insurance Commissioners introduced its own home inventory app. Sortly offers a free inventory app up to 100 entries, but if you want to take a more extensive inventory, you pay. Then there’s the UPHelp Home Inventory app from United Policyholders.
With a home inventory app, you typically take photos of your belongings and put them into categories. If you’d rather not use a home inventory app (or pay for one), you can take photos or videos of your belongings yourself. From there, you can add captions or edits to include details about each item, such as when it was purchased and how much it cost.
Once you decide how you’ll conduct your home inventory, your next step is doing the actual work. To that end, a good bet is to tackle your home room by room until you’ve covered all items of value. Don’t forget to check your shed, garage and attic for items you may want to include.
You should also account for items being stored outside of your home. “If you have items in a self-storage unit, make sure to include them, as they are usually covered under your home insurance policy,” says Amy Harris, State Farm spokesperson.
Now if you’re in the process of moving, you find it easier to conduct your inventory then. “The best time to tackle a home inventory is during a move,” insists Howard, “as you can make a list of everything as you pack up or unpack in your new abode. But ultimately there is no bad time to make a list of everything you own — as long as you’re doing so in advance of a loss.”
It’s important to keep your home inventory someplace safe and easily accessible. If you have a written inventory, make sure to scan and email yourself a copy and store it digitally in the cloud. You can keep a hard copy in a fire-proof home safe or a safe deposit box, if you rent one. You may even want to send a copy to your insurance company.
If you have a digital inventory, don’t just keep a copy on your phone or laptop. If those items are damaged, you’ll be out of luck. Instead, email yourself a copy and store one digitally in the cloud as backup.
Any time you acquire an item of value, be sure to update your home inventory. The goal is to have a comprehensive list of what you own, so it pays to get into the habit of updating your inventory as you go.
Source: realestate.usnews.com ~ By: Maurie Backman ~ Image: Canva Pro
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Here’s a piece of good news for rate-weary buyers: Relief is on the way. After months of turmoil, the housing market should be slightly calmer in 2024.
Although the factors that tanked affordability in 2023 — mainly high mortgage rates and lack of inventory — will still be at play in 2024, no one expects conditions to get any worse for buyers and sellers. In fact, many housing experts believe the new year will be a turning point for real estate: They say home sales should (somewhat) rebound, mortgage rates and prices should move lower, and more sellers will list their homes.
To be sure, these improvements will be gradual, and “housing affordability is still going to be the No. 1 issue for homebuyers,” says Danielle Hale, chief economist at Realtor.com. But slightly lower mortgage rates and prices will help lower the costs of homeownership.
What else can we expect from the 2024 housing market? Here’s what experts predict will happen with mortgage rates, inventory, home prices, and sales in the near future.
Mortgage rates were one of the main obstacles for homebuyers in 2023. After starting the year on a downswing, they quickly turned tail and headed up to two-decade highs, even flirting with 8% at one point.
But rates have eased lower in the last two months. A slowing economy, weakening labor market, and steady improvement in the battle against inflation led the Federal Reserve to hold the federal funds rate steady over the past few months and signal the possibility of rate cuts in 2024.
As a result, 10-year Treasury yields and the mortgage rates that follow their movement have dropped. Freddie Mac’s 30-year fixed-rate loan averaged below 7% for the first time since mid-August, and all the experts Money spoke to agree the downward trend will continue in the new year (although it’s not guaranteed).
However, don’t expect a dramatic drop into the 3% or 4% range. As with home sales, there’s a wide range of predictions for how low rates will go.
On the higher end, listing site Zillow expects interest rates to stay between 7% and 7.5% throughout the year. The National Association of Realtors is a little more optimistic, expecting rates to average below 7% by the start of the upcoming spring buying season and end the year at around 6.3%. In contrast, Realtor.com expects rates to end 2024 averaging 6.5%. With mortgage rates averaging 6.61% and trending lower at the end of December, it’s looking good for rates to stay below 7% this year.
Last year, sellers were loath to list their homes because they didn’t want to give up the low mortgage rates they’d previously locked in. As a result, there weren’t a lot of homes to choose from in 2023.
Thankfully, buyers can expect to see some improvement in the number of homes up for sale in 2024. Overall, inventory could increase by as much as 30% compared to last year, according to Lawrence Yun, chief economist at NAR, with some markets seeing even faster growth.
Skylar Olsen, chief economist at Zillow, says she has noticed in recent research that some homeowners who bought when rates were in the 5% and 6% range have readjusted their expectations around how low rates will go. They “are much less sensitive” to the rate-lock effect, Olsen says, adding that the rate homeowners consider “low enough” to prompt them to sell is increasing.
While there should be some improvement in housing supply and mortgage rates, the dynamics that have kept home prices high will continue.
Inventory is still well below demand. Before the pandemic, the number of active listings on the market averaged over 1 million homes, according to the St. Louis Fed. At the end of November, there were 754,846.
What does this mean for the market? Buyers are competing for fewer available homes, keeping upward pressure on home prices. So, on a national level, prices aren’t going to plummet unless we get a sudden and large influx of listings. Most experts forecast home prices will remain flat or decrease by about 1% in 2024.
That doesn’t mean there won’t be some markets where home prices majorly decline. There are currently a handful of cities where prices have decreased significantly, such as San Francisco and Las Vegas, and there’s a probability more cities will see considerably lower prices — just not on a level that could jeopardize the housing market as a whole.
Most housing analysts expect sales to improve this year thanks to improving overall market conditions. But not everyone agrees just how much better it will be.
The most conservative estimate for home sales comes from Realtor.com, which forecasts existing home sales to increase by 0.1% year-over-year, or a jump of about 4 million homes sold. At the opposite end of the spectrum is NAR, which is forecasting sales to increase by 13.5% compared to 2023.
It all goes back to — you guessed it — the hope that mortgage rates will continue to edge lower, which Yun says “will bring out more buyers and may even nudge some sellers to list their homes.”
Source: money.com ~ By: Leslie Cook ~ Image: Canva Pro
The Steps of a Real Estate Transaction
Congrats! You just sold your home quickly for thousands of dollars over the asking price. You may be eyeing that sell price with wide eyes, amazed that a large amount of money will soon be in your bank account.
Well, the cash will get to your savings account, but perhaps not as quickly as you hoped—or expected.
After all, buying a property is a complex transaction. And getting the money from the buyer’s bank to yours involves a multitude of steps that safeguard both parties.
So just how does that sweet offer turn into your cold, hard cash? Follow the money with us from offer to closing.
Good news: The buyers usually make a payment—known as earnest money—of between 1% to 5% of the purchase price of the home within three days of an offer.
The buyers part with this money to show the seller they are committed to buying the property, and to prove they can back up their offer with money. The seller then takes the property off the market. And this first payment will be put toward the total cost of the home.
But that moola won’t get deposited into your vacation fund just yet. Rather, it’s held by a third party—such as an escrow company, a real estate firm, or a lawyer—until closing day. This third party holds the payment until the contract is finalized.
That way, if anything goes wrong from the contract to the inspection, the neutral party can fairly distribute the earnest money—usually back to the buyers.
However, if the buyers flake, cancel the sale for no legitimate reason, or miss key dates in the contract, the seller may have the right to keep the money.
OK, so the earnest deposit is a nice chunk of money out there with your name on it. And soon there’ll be more in the form of a down payment, right?
Not exactly. The point of a down payment is for buyers to prove to the lending institution or bank that they have enough dough to pay back the loan they’re applying for (which will eventually be your money).
“And the buyer isn’t required to turn over the down payment until after a required loan for the real estate transaction is approved by the lender,” says David North, designated broker and owner of Realtrua.com, in Redmond, WA.
OK, there is some earnest money in an escrow account somewhere and even more money in the buyer’s account with your name on it. Now what?
You wait.
“In parallel with the lender’s process for approving the buyer’s loan—which usually involves an appraisal—buyers and sellers usually have various obligations described in their purchase and sale agreement,” says North. These may include inspections, repairs, disclosures, and various contingencies. The specific timelines and deadlines depend on your contract.
Meanwhile, a title insurance company investigates whether the property meets the needs and requirements of the buyers and their lender.
The entire closing process can take anywhere from 30 days to three months, but the average time is 50 days. Closing occurs when all of these steps have been completed and the loan is approved.
Hurrah, it’s payday! Also known as closing day, this is when you will hand over the keys to your former castle and the buyers will hand over a massive chunk of dough.
Here’s how it goes down: The buyers make the remaining down payment—minus earnest money—at closing. This is also when closing costs are paid.
“Once all the payments are made, closing is completed and the title is transferred from the seller to the buyer,” says North.
Immediately after the transaction closes, escrow pays the seller the full purchase price in the form of a cashier’s check or wire transfer—minus any fees, taxes, or real estate commissions, that the seller is required to pay. (See more on wire transfers below.)
In other words, after closing, you will now have an eye-popping amount of money in your possession!
If you’re to be paid for your home sale by electronic transfer, the good news is that most of the funds are available within a day. However, in recent years the real estate industry has been plagued with wire fraud.
“If you do go this route, be especially cautious when exchanging wiring instructions,” advises Bob Gordon, a real estate agent for Berkshire Hathaway in Boulder, CO.
Use only secure or encrypted email to trade banking information.
Even better? “Pick up the phone and have a conversation with your title company,” he suggests. As long as you’re aware and practice due diligence, wire fraud can be avoided.
Source: realtor.com ~ By: The Realtor.com Team ~ Image: Canva Pro
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Homeowners insurance covers damage to your home from fire, heavy wind, and other disasters.
Your home is more than just a roof over your head. It may be your most valuable asset — and one you likely can’t afford to replace out of pocket if disaster strikes. That’s why protecting your place with the right homeowner’s insurance is important.
Homeowners insurance covers your house and belongings in case of events such as fires, hail, tornadoes, and burst pipes. If one of these scenarios damages your home, your policy can pay to repair it. Homeowners insurance can also reimburse you for theft or vandalism of your belongings.
But a homeowners policy doesn’t just cover your house and your stuff. It can also pay to defend you from lawsuits or cover medical bills for someone who gets hurt on your property. And if you can’t live at home after a covered disaster, your homeowner’s policy could pick up the tab for a hotel or rental apartment.
Standard homeowners insurance policies generally include these six types of coverage:
Dwelling coverage covers the structure of your home, including the walls, floors, windows, and roof. Built-in appliances, such as furnaces, are typically included in your dwelling coverage. An attached garage, porch, or deck would fall under your dwelling coverage, too.
Which events are covered: Most homeowner’s policies cover your dwelling for any cause of damage that isn’t specifically excluded. According to the Insurance Information Institute, some of the most common causes of homeowners insurance claims include wind, hail, freezing, fire, and lightning.
How it works: A severe thunderstorm uproots a tree that falls onto your home, crushing part of the roof and attic. You’d pay your share of the repair cost — known as the homeowners insurance deductible — and then the insurer would pay the rest, up to your dwelling coverage limit.
Just like it sounds, other structures coverage provides insurance for structures on your property that aren’t attached to your house. That could include a shed, fence, or detached garage.
Which events are covered: As with dwelling coverage, most homeowners insurance policies cover other structures for any event that isn’t specifically excluded. That means you’d likely have coverage for fire, wind, hail, and snow, among other issues.
How it works: Part of your fence collapses under the weight of heavy snow. The insurance company would pay to repair it, minus your deductible.
Personal property refers to your personal belongings — like clothes, furniture, electronic devices, and appliances that aren’t built in. Most homeowners’ policies cover these items anywhere, not just inside your house. So if someone steals your bike from outside a store, it’ll likely be covered (minus your deductible).
Which events are covered: In most homeowner’s policies, personal property coverage works differently than dwelling and other structures coverage. Instead of covering your belongings for anything that isn’t specifically excluded, homeowner’s policies often cover only disasters that are listed.
These events, typically called “perils” in your policy, tend to include:
How it works: A pipe bursts on a frigid winter night, sending water cascading into your kitchen and dining room. Although dwelling coverage would pay for damage to built-in items such as cabinets, personal property coverage would take care of ruined furniture, minus your deductible.
Sometimes called “additional living expenses,” the loss of use a section of your homeowner’s policy can come in handy if your home is too damaged to live in. Loss of use coverage may pay for hotel stays, restaurant meals, or other expenses associated with living somewhere else if your home is uninhabitable after a disaster your policy covers.
Which events are covered: As long as your home is undergoing repairs for a covered claim, you’ll likely be eligible for loss of use coverage. But if your home’s damage is from a disaster that isn’t covered — such as a flood — your insurer won’t pay your additional living expenses, either.
How it works: After a kitchen fire spreads to your living room, your home is out of commission for a few months while contractors make repairs. Your insurance company would pay for you and your family to rent a similarly sized house nearby.
Personal liability coverage offers financial help if you’re responsible for injuring someone or damaging their property. Coverage generally extends to anyone in your household, including pets — so if your dog bites someone at the park, you may have coverage. (See Does Homeowners Insurance Cover Dog Bites? for more information.)
Which events are covered: Liability insurance covers bodily injury and property damage to others, with some exceptions. For instance, your policy won’t cover criminal acts or harm you cause on purpose. Nor will it pay for injuries or damage from a car accident (your liability car insurance would cover those).
How it works: A delivery person slips on your icy sidewalk before you can salt it. He breaks his wrist in the fall and sues you for medical bills and lost wages. Your liability coverage could pay your legal fees, plus any damages you’re responsible for in the lawsuit, up to your policy limit.
Like liability coverage, medical payments coverage pays if you cause physical injury to someone outside your household. However, you don’t need to be found at fault for medical payment coverage to pay out.
Which events are covered: You could tap your medical payments coverage if someone suffers a minor injury on your property or you cause harm to someone outside your home. Similar restrictions apply to liability and medical payments, with no coverage for intentional acts or car accidents, among other exclusions.
How it works: Your dog bites the hand of a visiting friend. There’s no serious harm, but your medical payments insurance covers the cost of their trip to urgent care for stitches.
Even the broadest homeowners insurance policy won’t cover everything that could go wrong with your home. For example, you can’t intentionally damage your house and then expect your insurer to pay for it. Policies also typically exclude damage from other causes such as:
However, you can buy separate coverage for some of these risks. Flood insurance and earthquake insurance are available separately, and in hurricane-prone states, you may need or want windstorm insurance.
Talk to your insurer if you have concerns about problems your policy doesn’t cover. In many cases, you can add endorsements — which usually cost extra — that offer more coverage.
Below are a few of the most common home insurance endorsements. Note that availability may vary by state and company.
Scheduled personal property covers a specific valuable item such as a ring or musical instrument. You may need an appraisal — a document that states the value of the item — to get this coverage.
Ordinance or law coverage pays to bring your home up to current building codes during repairs or rebuilding.
Water backup coverage pays for damage due to backed-up sewer lines, drains, or sump pumps.
Equipment breakdown coverage pays for heating, ventilation, and air conditioning, or HVAC, systems, and large appliances if they stop working for reasons other than normal wear and tear.
Service line protection pays for damage to water, electricity, or other utility lines that you’re responsible for.
Identity fraud coverage pays expenses associated with identity theft such as lost wages and legal fees.
This table shows common problems and whether your homeowner’s insurance policy will cover them.
|
Problem |
Covered? |
Details |
|---|---|---|
|
Dog bites |
Usually. |
Your liability coverage typically covers expenses if your dog bites someone outside your household. See Does Homeowners Insurance Cover Dog Bites? |
|
Fallen tree |
Maybe. |
If a covered event knocks a tree onto your home, your policy will probably pay to remove it. But if the tree simply falls on your lawn, you’re on your own. Learn more about home insurance and tree removal. |
|
Fire |
Usually. |
Fire is one of the standard perils most homeowners insurance policies cover. Learn about home insurance and wildfires. |
|
HVAC problems |
Maybe. |
If a covered event such as a windstorm damages your heating or cooling system, your homeowner’s policy would likely pay to repair it. Adding an equipment breakdown endorsement to your policy could give you additional coverage for mechanical failures. However, homeowners insurance won’t pay for normal wear and tear. Learn more about homeowners insurance and AC units. |
|
Lost jewelry |
Usually not. |
A standard homeowners insurance policy covers jewelry only for theft, fire or other named events, not for accidental loss. That’s why it’s a good idea to add broader coverage for valuable jewelry. Learn more about jewelry insurance. |
|
Mold |
Maybe. |
It depends on the cause of the mold. Most insurers will cover mold only if it’s caused by a covered problem such as a burst pipe. Learn more about homeowners insurance and mold. |
|
Plumbing |
Maybe. |
Damage from sudden, accidental leaks may be covered, but slow leaks that develop over time generally won’t be. (The latter are considered a maintenance issue.) See Does Homeowners Insurance Cover Plumbing Problems? |
|
Roof leaks |
Maybe. |
It depends on why your roof is leaking. Insurance typically covers damage due to a sudden, accidental event such as hail or wind, but it won’t cover simple wear and tear. Learn more about homeowners insurance and roof leaks. |
|
Termite damage |
Usually not. |
Insurance companies generally consider dealing with infestations to be a part of regular home maintenance, which they don’t cover. Learn more about homeowners insurance and termite damage. |
|
Water damage |
Maybe. |
It depends on the type of water damage. Most home insurance policies won’t cover floods, for example. They won’t cover damage from a backed-up drain or sewer unless you’ve paid for that endorsement. But if a pipe freezes and bursts, your insurer will typically pay for the resulting damage. To learn more, see Does Homeowners Insurance Cover Water Damage? |
Homeowners insurance comes in several types, called “policy forms.” Some types have more expansive coverage than others, so it’s worthwhile to know the difference. Note that different insurance companies may have different names for these policies.
HO-3 insurance policies, also called “special form,” are the most common. If you have a mortgage, your lender is likely to require at least this level of coverage.
HO-3 insurance policies generally cover damage to your home from any cause except those the policy specifically excludes, such as an earthquake or a flood. However, where it concerns your belongings, HO-3 insurance typically covers only damage from the perils listed in your policy.
An HO-5 insurance policy offers the most extensive homeowners coverage. It pays for damage to your home and belongings from all causes except those the policy excludes. It’s typically available only for well-maintained homes in low-risk areas, and not all insurers offer it.
Much less popular are HO-1 and HO-2 homeowners insurance, which pay only for damage caused by events listed in the policy.
Other policy types include HO-4 insurance for renters, HO-6 for condo owners, HO-7 for mobile homes, and HO-8 — a rarely used type that provides limited coverage for older homes.
If your home is destroyed, your homeowner’s insurance company isn’t likely to simply write you a check for the amount listed on your policy. First, you’ll have to file a claim, documenting the damage. And your payout could vary depending on your coverage and deductibles.
One key factor in your payout is whether your coverage will pay whatever it takes to rebuild your home, even if that cost is above your policy limits. This situation may arise, for instance, if construction costs have increased in your area while your coverage limits haven’t changed. Here’s a rundown of several options you may encounter.
Actual cash value coverage pays the cost to repair or replace your damaged property, minus a depreciation deduction. Most policies don’t use this method for the house, but it’s common for personal belongings. For items that are several years old, this means you’ll probably get only a fraction of what it would cost to buy new ones. Learn more about actual cash value coverage.
Functional replacement cost coverage pays to fix your home with materials that are similar but possibly cheaper. For example, your contractor could replace damaged plaster walls with less expensive drywall.
Replacement cost coverage pays to repair your home with materials of “like kind and quality,” so plaster walls can be replaced with plaster. However, the payout won’t go above your policy’s dwelling coverage limits.
Some policies offer replacement cost coverage for personal items. This means the insurer would pay to replace your old belongings with new ones, with no deduction for depreciation. If this feature is important to you, check the policy details before you buy. It’s a common option, but you typically need to pay more for it. Learn more about replacement cost coverage.
Extended replacement cost coverage will pay more than the face value of your dwelling coverage, up to a specified limit, if that’s what it takes to fix your home. The limit can be a dollar amount or a percentage, such as 25% above your dwelling coverage amount. This gives you a cushion if rebuilding is more expensive than you expected.
Guaranteed replacement cost coverage pays the full cost to repair or replace your home after a covered loss, even if it goes above your policy limits. Not all insurance companies offer this level of coverage.
Homeowners’ policies typically include a deductible — the amount you must cover before your insurer starts paying. The deductible can be:
When you receive a claim check, your insurer subtracts your deductible amount. Say you have a $1,000 deductible and your insurer approves a claim for $10,000 in repairs. The insurer would pay $9,000, and you would be responsible for $1,000.
Be aware that some policies include separate — and often higher — deductibles for specific types of claims such as damage from wind, hail, hurricanes or earthquakes. For example, a policy might have a $1,000 deductible for most losses but a 10% deductible for optional earthquake coverage. This means if an earthquake damages a home with $300,000 worth of dwelling coverage, the deductible would be $30,000.
Liability claims generally don’t have a deductible.
Source: nerdwallet.com ~ By: Sarah Schlichter ~ Image: Canva Pro