As a responsible real estate agent, it’s up to you to help make sure your clients know what they’re signing up for when they purchase a house. It’s easy for new, inexperienced homebuyers to get in over their heads without guidance and dedication on the part of their REALTOR®.
Here’s what you need to teach your clients. With each monthly house payment, they’re actually paying for four things, represented as PITI: principal, interest, (property) taxes, and insurance. Most home lenders have mortgage calculators available as apps or online widgets that allow homebuyers to determine the amount of principal and interest due each month, but it’s up to the buyers to research property taxes and homeowners’ insurance.
The bottom line is this: A home won’t fit in your clients’ budget unless they can afford each part of the monthly payment. Therefore, it’s crucial to investigate homeowners’ insurance rates early on in the house-shopping process.
Your clients can easily shop rates between major providers by visiting a one-stop comparison site. Alternatively, you can help them contact an independent insurance agent in your area who can act as a broker and shop around at different companies to find the best coverage that will fit comfortably within their budget.
Your clients can work with their insurance agent to tweak their deductibles and other relevant factors to ensure that their monthly payment fits inside the parameters for mortgage approval. If the insurer they choose offers several different types of insurance—such as auto, RV, or motorcycle insurance—they may be able to lower the cost of their homeowners’ insurance by bundling it with another type of coverage.
Advise your clients to let their agent know if a large portion of their home’s sales price stems from a large lot since homeowner’s insurance only covers the house’s structure and not the property it sits on. Also, suggest that they request a report on previous insurance claims filed on the home through the Comprehensive Loss Underwriting Exchange (CLUE). This national database will inform them if their home has a history of claims that may affect its insurance costs.
Your clients may ask you why the insurance rates in your area are what they are. You can tell them that certain factors like the age and size of the home, the type of materials used to build it, the presence or absence of adequate smoke alarms, and the home’s proximity to a water hydrant or fire department can affect the insurance rates for their particular home and that areas prone to natural disasters like earthquakes, hurricanes, and/or wildfires have higher insurance rates. Also, if the home is in a flood zone, be sure to advise your clients to obtain flood insurance, which must be purchased separately through a qualified government agent.
Educating your clients about the entire costs associated with homeownership will protect them from falling behind on their mortgage payments and winding up underwater. Be responsible and do your part to make sure they know what’s involved.
Insurance is about far more than protecting possessions—it’s about providing peace of mind. This difference is why Fathom Holdings acquired Dagley Insurance. Dagley understands what homeowners worry about and structures their policies to match. Moreover, at Dagley, it is about more than insurance, it is about building lasting relationships through unmatched customer service and care. Ready to help your clients with their insurance needs? Share the Dagley difference at http://fathomquote.com.