Updated June 28, 2019 - Buying a house can be an overwhelming and sometimes intimidating process. You want to purchase a house that not only works with your lifestyle but is also safe, secure, comfortable, and economically valuable. Your home will likely be one of your greatest costs and assets. Along with property taxes and mortgage payments, your homeowners insurance can be a significant monthly expense in your budget. One way to help mitigate high insurance premiums is by buying a home with minimal risk or problems.
When house hunting, what should you be on the lookout for to ensure your new home will be safe, maintained, and cost-effective?
Buying a House: Homeowners Insurance Red Flags
1. Overt staging
Many homeowners or agents will clean and stage a house for an open house or showing. This staging is meant to show the potential of the house with stylish furniture and homey accents.
However, too much staging can actually be a cause of concern. For example, if there’s a strong aroma in the home, like freshly baked cookies or extensive potpourri, the stager may be trying to mask other scents like mildew or mold.
When you walk into a house, don’t be drawn in by the staging. Look past the attractive furniture and pleasant scent to see the true backbone of the house.
2. Foundation issues
Foundation problems are one of the most costly home repairs. Sometimes these foundation concerns aren’t even fixable if the damage has gone too far.
If there is evidence of foundation cracks in the home’s inspection and you still decide to purchase the house, your insurance company may not pay for the claim. Moreover, if you make a claim for foundation issues, your insurance provider may drastically raise your homeowner premiums in the future.
So how do you know if there are foundation issues?
Every home will have a few cracks here and there. This is caused by normal house “settling” processes. However, larger gaps should be a warning flag. This includes uneven floors or cracked doorframes and windows. If you want to know if the floors are uneven, stand on one side of the room and roll a marble or other wheeled- object. If it moves down the floor on its own, there’s likely an uneven foundation concern.
You should also consider hiring a structural engineer or inspector to ensure the foundation is secure and safe.
Mold is one of the greatest signs of an uncared-for home. Even if the homeowners cared for the home, mold could indicate high humidity in the space, which can cause future problems as well. Plus, removing mold is an expensive and time-consuming process that is not typically covered by homeowners insurance.
Look for signs of mold in high-humidity rooms, like bathrooms and kitchens. Open cabinets, especially under the sink, to look around the water pipes and drains. Also check caulking around faucets and tubs as well as ceiling patches. You should look for small black or gray spots, which are the first signs of more serious mold issues.
Mold also often has a musty smell. If the odor in the house is pungent or the stager seems to be masking an odor, be on the lookout for growth.
4. Outside water
When house hunting, you want to be aware of nearby bodies of water. Water shouldn’t deter you from buying a house, especially if you want a bubbling brook or calming lake in your backyard. However, you should note the location of the water in comparison to your home.
For example, if the water is on the same or higher level than your home, it could flood and flow down into your house. If the water is on a lower level than the house, it will be harder for it to invade your home.
Consider the location of the water in conjunction with the typical weather of the area as well. If you live in a stormy or rainy area, a nearby body of water will likely flood on a regular basis. Home insurance often does not provide coverage for flood damage to homes in this kind of environment. Instead, you would need to consider flood insurance.
You should also be on the lookout for standing water on the property that isn’t meant to be there. Pools or puddles of water on your lawn or patio could indicate improper drainage or grading.
Note: Flood insurance is one of the most expensive insurance costs for homeowners. Choose your location wisely to reduce premium costs.
5. Water damage
Water damage in the house is a huge red flag. It could indicate flooding or plumbing problems that could be an extreme cost to you and your insurance company in the future.
You can check for water damage by looking at walls and ceilings for water lines. You should also look at any exposed piping, like in basements, attics, or laundry rooms. This will allow you to see the approximate health of these pipes; check for rust, water stains, leaking, and any areas of weakness.
P.S. If it looks like a few wall areas were recently painted, the homeowner may be trying to cover up water damage or mold.
If the home doesn’t have proper ventilation, it will cause mold, mildew, and allergens. Insurance assessors check for ventilation problems to ensure your home won’t be subject to ongoing concerns of high-moisture.
Be aware of condensation or bubbled paint around windows, doors, or vents. This likely indicates moisture in the walls and ceiling.
Some ventilation concerns can be fixed by adding in vents or windows, but be sure to discuss this with an inspector or contractor.
7. Cosmetic concerns
Small cosmetic concerns shouldn’t be a cause for concern. Every house will need some sort of updating to meet your needs. However, some cosmetic concerns could be a sign that the previous homeowners didn’t take care of the house properly.
If they didn’t take care of the front end, they didn’t take care of the back end. Thus, a number of cosmetic concerns might indicate a number of structural concerns.
For example, uneven tiling in the bathroom or kitchen could indicate a DIY project by an inexperienced homeowner. They could have flipped the home or done their own renovations, which means the house may also have amateur electrical, plumbing, and foundation.
Roofs generally have a life expectancy of only 15-20 years. If the roof hasn’t been replaced or repaired recently, you’re likely looking at a roofing problem in the first couple years of home ownership. Replacing a roof can be incredibly expensive, and most insurance providers try to avoid paying for this claim.
When examining the roof, look at whether it is flat or tilted; flat roofs tend to accumulate moisture faster. Also take note of the material, sealing, seams, and edging. If roof tiles are falling off or ripped, you can assume the homeowner hasn’t replaced or repaired the roof in a number of years.
Infestations can be a challenge to get rid of if the pests have already made a home in the house. A severe pest infestation is not only difficult to terminate but it also indicates a lack of upkeep by the previous homeowner. Harmful pests include termites, powder post beetles, and carpenter ants. You should also be aware of animals living in the attic or basement.
While walking through the home, keep an eye out for small, dark animal droppings and black patches. Black patches in corners and cabinets could indicate eggs or larva of pests. When you go in the attic or basement, keep an ear out for tiny footsteps; you’ll likely hear these when you first open the door to the room, as animals will scurry away from the light and noise.
You may also want to call in a licensed pest inspector to see if there are any signs of infestation.
Know where the house is located. What is the reputation of the neighborhood? Is it generally considered a safe place to live? Do you live near a detention basin or landfill? What is the parking situation? What are the nearby amenities? What do the nearby houses look like? Are you in an earthquake or flood zone?
Your homeowners’ insurance will consider the safety and locality of your house when assessing your risk. The greater your risk of theft, storms, or damage, the higher your insurance premiums will be.
When house hunting, walk through each home with an observant and skeptical eye. Be sure to find a legitimate, comprehensive home inspector to do a thorough inspection before purchasing. An inspector will help detect major and minor issues that you should be aware of during the buying process.
Ignoring critical concerns in the hopes your homeowners insurance will pay for it is not a good idea. Every claim you make with your home insurance provider could increase your monthly premiums. When you make a claim soon after buying a new house, you quickly set a precedent of high insurance premiums for the extent of your home ownership.
Don’t get stuck with exorbitant home repairs or insurance premiums by purchasing a “needy” house. Purchase a secure house, and you’ll have security moving forward.
Not sure how purchasing a new home will impact your homeowners insurance? Call an insurance advisor today at (844) 300-3237 to talk to a qualified agent about finding the lowest possible insurance premium for your new home!
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