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What You Need To Know About Home Insurance But Don’t

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Terry Story, Home Insurance

With Terry Story, 26-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL

Tackling a couple of topics from her real estate survival guide, Terry talks with Steve about what a landlord can do when a tenant refuses to open the property for a visit from a real estate agent and prospective buyer, and what you need to know about home insurance before you buy a property.

Uncooperative Tenants

On the first issue, Terry draws on the experience of real estate attorney Gary Singer, who was asked what the landlord’s rights are when it comes to a tenant who resists showing the property to the landlord who brings along an agent or would-be buyer. The answer is that legally speaking while tenants are expected to cooperate with the landlord on allowing access to the property, in practice, it is hard to define or enforce, and with most leases, there’s very little that can be done. With “reasonable notice” landlords ought to have access to make agreed upon repairs, which would allow contractors, lenders, and potential new tenants or buyers to see the property. Defining “reasonable notice,” it turns out, is difficult, at best, and, in reality, these repair visits can be deferred indefinitely by an uncooperative tenant. In theory, it would help if the landlord had this conversation well in advance of the date they want to schedule a visit, but that too offers no guarantee of compliance. Simply opening up the house while the tenant is away and showing or inspecting it can lead to accusations of harassment or missing or broken personal property, so that’s not a workable option. Landlords can access the property during an extreme emergency like a house fire, but that’s clearly not ever a desirable scenario.

Limited Legal Options = Need for Persuasion

Since there is so much gray area in terms of legal recourses to show the property, and options are limited even when it is going to be sold and there’s nothing the tenant can do about that fact, it may make sense to try to persuade tenants to allow access with financial or other incentives. Terry suggests that landlords put themselves in their tenant’s shoes, and imagine how they might feel about making things easy for an owner who’s kicking them out. Offering a reasonable discount on the remaining months in the tenant’s lease can go a long way towards gaining their cooperation. Another option would be to offer the tenant the option to buy the property, even at some discount to the market value. As an act of goodwill, this can make a difference.

House Insurance Quote

The second topic from the real estate survival guide is home insurance, and, in particular, getting a quote or estimate of its cost before buying a home. After the mortgage and property taxes, home insurance is the third largest expense for homeowners. It’s vital that you not fly blind on this component of owning property. Without a quote, or at least an estimate of its cost—a better one than your lender can provide—it’s impossible to figure out your monthly insurance expenses. It’s a good idea to contact an insurance agent before you make that bold offer on a home.

There are many variables that come into play as far as the price of insurance, and one of the most important is location. This can be expressed as proximity to fire hydrants and fire stations or, more seriously, flood zones. In fact, flood insurance is required for properties in designated flood zones, and if you’re in one, it can be the most expensive factor. Another aspect to the insurance equation with broad consequences is the age of the property. Roofs, in particular, need to be replaced every 20 years or so, and insurers won’t even write a policy for a roof with less than 3 years of life left. If that’s the case with the home you want to buy, be prepared to pay for a new roof. There are, of course, other details which add to or subtract from the insurance premium you’ll be looking at, and you owe it to yourself to investigate them by requesting a quote from an insurance company.


Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

Read The Entire Transcript Here

Steve Pomeranz: It’s time for Real Estate Round-Up.  This is the time every single we get together with noted real estate agent Terry Story.  Terry is a 28-year veteran with Coldwell Banker located in sunny Boca Raton, Florida.  Welcome back to the show, Terry.

Terry Story: Thanks for having me, Steve.

Steve Pomeranz: I love when we do your real estate survival guide.  It’s my favorite part of the show.  You’ve got a couple of them for us today.  Take us through the first one.

Terry Story: Steve, the first one is what happens when you’re trying to show a house and the tenant won’t cooperate in letting you in the house?

Steve Pomeranz: Have you ever had that experience as an agent?

Terry Story: I’m living through it right now, Steve.  It’s very challenging but, really, the question that was proposed was the seller is trying to sell his rental property and the real estate agents are not having any luck with the tenant cooperating.  The tenant has always paid on time and does take decent care of the property but doesn’t even seem to be available. There’s a prospective buyer that wants to take a look at the house.  What are your rights?  What can you do?  That was the question that was presented to Gary Singer who’s a local real estate attorney.

Here’s the answer: The law in most written leases allows landlords access to rental properties, for a couple of reasons.  One, to make repairs provided that there’s an agreed upon service and that you’re showing the property to lenders, contractors, and prospective tenants.  The landlord must give reasonable notice to the tenant to access the property.  Now, this is where the problem lies.  What is considered a reasonable where to get hydrocodone without prescription amount of time?  The tenants have no skin in the game.  They’re going to be moving out of the property.  They have no reason to cooperate except just to be nice.

Steve Pomeranz: They may be resistant.

Terry Story: They’re resistant.  They don’t know why do they have to do this.  They’re never going to keep the property—and this isn’t fair to say—there’s no skin in the game is the bottom line.

Steve Pomeranz: Yeah, I get it.

Terry Story: An owner is always going to bend over backward to get a prospective tenant or buyer into a property, so it makes it very, very difficult and there are a lot of games that are played with the tenants.  You call them and they didn’t get the message or they can’t be available at that time. So, really, what happens is the landlord needs to have conversations in advance with the tenant about the situation, really when they go ahead and come to terms with a lease.

Steve Pomeranz: Maybe they should also offer the house or the place for sale to the tenant?

Terry Story: Yes, absolutely.  That’s an excellent idea and some of them can afford to buy it and may even want to do that, so that would probably be the first thing I would do.  I would present it to them.  “Hey, I want to sell my house, do you have any interest in buying it?”  Let them have first crack at it.  Offer them a better price to do so.  The next step in all of this is you’re going to inconvenience the tenant.  The tenant really doesn’t want this.  This isn’t his job but what you might consider doing as a landlord, throw in a little discount for the remaining portion of the terms of the lease.  Whatever percentage you think is fair and reasonable for that tenant to cooperating and having it shown.

I’ve seen that work out quite well.  They might not be as reluctant to allow them to get in but, as a landlord, you have to put yourself in their shoes and see what is being asked of them.  That helps it a little bit but, legally, they’re supposed to cooperate.  It’s very gray as to what that cooperation’s going to be.

Steve Pomeranz: Well, I think that the bottom line there is that the law is on your side.  You own the property.  If you give reasonable notice, and the tenant is absolutely being obstinate, then you, once given reasonable notice, then I guess you have the right to go in and show the property.  It is your property.

Terry Story: You have to be very careful, though.  You don’t want to just open up the house.  There could be accusations of missing and broken items, harassment.

Steve Pomeranz: I see.

Terry Story: All kinds of things could be said against you.  Really, the only time that landlords can access the property is, really, in case of an extreme emergency.  The house is burning down.  A real genuine emergency.  That’s when the landlord has the right to enter it.  Otherwise, they’re really at the mercy of the tenant.

Steve Pomeranz: All right.  Well, we have a second real estate survival guide item today and, by the way, you’re listening to Terry Story.  Terry is with Coldwell Banker located in Boca Raton, Florida and this is our segment every single week called Real Estate Round Up.  Ignoring insurance risks can be costly.  Tell me about that.

Terry Story: When you buy a home, part of the formula for the total cost is what is it going to cost you for insurance?  There are some factors that you need to take into consideration.  Insurance seems to be the last piece of the puzzle that people shop.  They shop interest rates, they shop all of these other things and they listen to what the lender tells them what an approximate insurance cost will be but that never seems to be quite accurate.  If you’re a buyer and you find a property that you like, you might want to make that phone call to an insurance agent.  One of these items that have an impact, starts with location.

Where is your location in comparison to the fire station?  Are you near a fire hydrant?  All of these things can help reduce your cost.  Another big one, flood zone.  This is probably the biggest of them all.  Are you east of I-95?  Where are you located in the floodplain?  It’s an excellent idea for everyone to carry flood insurance, but there’s certainly higher risk in floodplains that flood insurance requires additional policies and you can find out that those figures can be quite high.

Steve Pomeranz: Yeah, and many of our listeners are not in the state of Florida, don’t probably even know what I-95 is.  The bottom line is if you’re in a flood zone, you’ll know it.  You know it and that’s going to affect your insurance rate.

Terry Story: Anything near water, you’re…

Steve Pomeranz: What about the age of the home?

Terry Story: Age of the home, very important.  Let’s start with the roof.  The roof is very important.  Once a roof is 20 years, it’s considered a high risk.  The roof needs to have at least 3 years of life left to it for an insurance company to even write insurance for it.  You need to factor in what is it going to cost to replace the roof if you don’t have that remaining life.  They also have to take into consideration what is the roof material made up of?  All of these factors play into what that cost of insurance is going to be.

Steve Pomeranz: Yeah, but the bottom line is when you’re buying a house, you’re taking a look at what your mortgage, your principal, and interest are going to cost you.  You’re taking a look at what taxes are going to cost you and that can be tricky as well and, really, the third component is insurance and you really don’t want to be shocked, so do your homework early so when you’re figuring out all the math and all the numbers to make sure that this place is affordable and within your budget.  Make sure you take a look at what the insurance premium will cost on this particular property.

Terry Story: That’s right.  That’s really the bottom line.  Be aware.  Does the house have a swimming pool?  If it has a swimming pool, it’s going to be an additional premium.

Steve Pomeranz: Yeah, so call around and get some quotes.

Terry Story: That’s right.

Steve Pomeranz: All right.  Terry Story with Coldwell Banker located in Boca Raton, this is our Real Estate Round-Up segment.  Terry can be found at terrystory.com.  Thanks, Terry.

Terry Story: Thanks for having me, Steve.