Author: Ali Palacios - Broker

How much Insurance do I need for my home?

People often wonder how home values are determined for insurance. It is sometimes difficult for buyers/sellers to separate the market value from the insurance value. Insurance value is the cost to replace/rebuild the home. No consideration is given to the land value or the location. You can have a $1,000,000 home to purchase only insurance valued at $487,000 because the cost of the land is not a consideration. The flip can also be true, a house on the market for $220,000 might take $300,000 to rebuild. Simple math formulas must be applied to the home.

Do not skimp on the overall coverage amount and here is why. Before Harvey the average rebuild cost per square foot in the Houston area was about $100. After Harvey the scarcity of building supplies shot the price up to $160 per sq. ft. and the price has only recently started to fall back to about $110 to $120 per sq. ft over two years later. A 2400 sq. ft. house needs to be covered for at least $264,000 to make sure there are enough funds to rebuild the property.

When looking at an older home, consider the risk of old systems and materials that are no longer available. It can be significantly more expensive to insure a smaller older home that has not been updated than a much larger 5-year-old home.

There are two levels of coverage as well, Replacement Cost and Actual Cash Value (ACV). Avoid ACV whenever possible- Why? The insurance adjuster will look at what the property insured is really worth- 10-year-old carpet is worth about $50 per room. No where can you purchase replacement carpet for a room at $50! Replacement coverage is exactly as it states- the amount of coverage needed to replace the insured property. ACV is really no coverage at all.

What exactly is Homeowner’s Insurance?

Insurance can be confusing because there are so many parts. Broken down the foundation of all policies are the same.

Coverage A – the Building – The amount your home is covered for in the event of a total loss. (Should be around $110 per sq. ft.) This covers the structure of the home and anything built in or attached. (Flooring, cabinets, appliances, and the A/C System.)

Coverage B – Other Structures – This is to cover the other structures you may have on your property. (Completely detached garage, a shed, a she-shed, a gazebo, the fence, etc.) This coverage is usually equal to 10-30% of the Coverage A amount.

Coverage C – Personal Property – The best explanation I have heard is this – If you could pick up the house and shake it, everything that falls out is your personal property. Another way to look at this is, if it goes with you when you move – it is personal property. Mathematically the amount is about 40-50% of the Coverage A amount.

Coverage D – Loss of Use – If you can’t be in your home, this pays for you to live somewhere else. Everyone thinks this is for floods or fires, but what if the water line to your home breaks, can you live for weeks with no water? A burst pipe in a kitchen can shut it down for weeks – can you live there if you can’t prepare food? This coverage is usually 10-30% of the Coverage A amount.

Coverage E – Personal Liability – This covers you if you, a family member or something under your control damages or causes harm to someone else or their property. Example – Your tree hangs over into the street. A windstorm comes through and a branch from your tree lands on a brand-new car visiting a neighbor. You are covered. A tree in your yard is blown over and lands on your neighbor’s house doing damage. You are covered. The fence blows over and kills your neighbors pedigreed pet. You are covered. This coverage is incredibly cheap. It is recommended that you have $100,000 more in coverage than the value of your home (Coverage A).

Coverage F – Medical Payments – A child comes to your home and decides to climb a tree which gives way causing the child to fall and break an arm. This coverage will cover the medical bills of the guests and visitors – not your own family.

Additional Coverage A – In response to situation like Harvey, this coverage provides additional funds to repair your home in the event of a disaster which is defined by law as an event that impacts three or more homes. Example- you have your home insured at $110 per sq. ft and another hurricane comes through the Houston area and your home is damaged by wind and subsequent rain- not flooding. The prices of repairs skyrocket and the cost to repair is now $150 per sq. ft. this Additional Coverage A is then available to make sure your home is repaired completely and with equal replacement materials. You will pay additional premium for this coverage, but it is minimal. ($25 to $50 per year on the average policy).

Do you have questions or would like a free quote? Feel free to contact me.

Blog Contributor

Karen Tannery 

Account Executive

281-712-7272

karen.tannery@goosehead.com

Home Insurance – #1 source of claims: WATER

When looking for homeowner’s insurance in Texas, one must look at the #1 source of claims: WATER. Nearly 70% of the claims each year are water related. You may be thinking hurricane and storms, but that is a very small percentage. The four sources of the water claims are:

  • Sudden and Accidental (burst pipe) – This covers a “sudden” water related malfunction
  • Seepage and Leakage – slow leaks that you don’t see right away like the leaking hose at the back of a dishwasher or the discharge line on your a/c system is blocked and is dripping water through the attic into the house.
  • Water back up and Overflow – Water that enters the house through the plumbing caused by issues with the storm drain system and usually heavy rain which pushes disgusting water ruining anything it reaches.
  • Foundation Water Damage Repair – This is coverage that many companies cut or leave out but are the most expensive repairs to the homeowner. Coverage is for the foundation when it is damaged from one of the three water damages or from the repairs in response to the water damage.

Flood insurance is a separate policy and very inexpensive. No homeowner’s policy in Texas covers flood.

Blog Contributor

Do you have questions about home insurance? Feel free to contact me at my information below.

Karen Tannery 

Account Executive

281-712-7272

karen.tannery@goosehead.com

Roof maintenance, attic ventilation and attic leaks

Please note: I am not a home inspector. I am a home owner just like you. Being proactive instead of reactive to repairs can save you money. If you have concerns, a roofer will be able to look at your roof and attic and see if more ventilation is needed.

Deterred maintain in a home can cost you money. Many of items can easy be completed by the home owner. If you don’t feel comfortable, a handyman can usually tackle most of these items.

Attic leaks and lack of insulation (10-12 inches recommended) will make your home less energy efficient which in turn will cost you money in energy bills. 

Insulation makes a big difference in energy efficiency. Before you add insulation, take the time to check and make a few repairs as needed:

  • Attic leaks (attic bypasses)

Attic bypasses are air leaks from your living space into your attic. These leaks occur when wires, pipe and air ducts go through your ceiling and into your attic. This issue will not only allow cold or hot air to leak into your attic but it will also cause condensation; which in term causes moisture issues. These moisture issues will cause mold and wood rot.

Before adding insulation make sure to seal any potential leaks.

  • Attic Ventilation
Imagine source: https://www.nachi.org/blog/2009/10/07/attic-ventilation/

Your attic needs air flow. WHY?

  • Energy efficiency
  • Avoids moisture build up
  • Help maintain the life of your roof shingles and other roof components

This is critical for the home but also for the occupants. Anyone that has ever been in an attic knows how very hot it gets. This heats needs someone to escape to. If the heat is trapped in the attic, it will conduct heat into your home (not energy efficient) and will cause the home to deteriorate faster. You will experience moisture issues that will lead to mold, wood rot, rusty nails, among other things. Keep in mind that termites and carpenter ants love moisture and they thrive in environments like this.

There are two type of roof ventilation:

  1. Passive ventilation: These include ridge vents (at the peak of your roof), soffit vents (in the roof eaves), turbine (vents that driven by wind and penetrate the roof) and gable vents (at the top of a gable). At a minimum you should have a ridge vent and soffit vents. Soffit vents will allow air to enter the attic and ridge vents will allow air to exit the attic (heat rises).
  2. Active ventilation: These are systems that require power to operate. The most common are attic fans and whole-house fans. These fans are typically control by a thermostat. Attic fans are typically mounted to the roof and whole-house fans are mounted to the attic floor and they pull hot air from the living space and exhaust it to the outside through the attic space.

Your general maintenance should include looking for signs of problems. Our roofs are typically composition roof shingle covering wood decking. If the shingles are failing you will normally see signs of moisture on the wood decking. Here are a few things to look for:

Moisture damage or stains. Mold or water stains on wood, wet insulation and rusty nails. Is there a moisture smell?

Ducts must not be in contact with each or lay on top of the joists other or they will create condensation that is prone to mold and mildew issues.

The ducts must be elevated and supported from the rafters

Bowed Rafters

Damaged vent pipe

A dish installed on top of a roof needs to be sealed at the point it’s attached to prevent water damage.

Vents that have come loose and no longer vent outside

Dusty vents block air flow and create condensation and possible mold

Wood rot at facia board

Lifted shingles

Missing Shingles

Damaged roof decking

Tree limbs or vegetation that lay on the roof will allow moisture to accumulate and deteriorate the shingles.

Soffit damage

One of the most common issues that come up during a home inspection is a kitchen, bathroom, laundry, and similar exhaust systems that vent directly into the attic instead of exhausting to the exterior. The moist hot air after a shower will vent into the attic and deposit moist hot air that will lead to wood rot and mold issues.

Source: Family Handyman Magazine

Debris. The vents can only work if they are not covered. Make sure that your insulation is not covering the vents, clean around the vents to make sure other debris and dust are blocking the holes. Over time, soffit vents may be painted and paint might block the holes as well. Make sure to replace or unclog the vents.

Source: Family Handyman Magazine


Sources and more information:

https://www.familyhandyman.com/attic/how-to-seal-attic-air-leaks/

https://www.nachi.org/blog/2009/10/07/attic-ventilation/

https://www.energystar.gov/ia/partners/manuf_res/salestraining_res/HS_diy_guide.pdf


What is a Make-Ready Cleaning?

A Make Ready Cleaning is also known as a Move-In/Move Out cleaning. Normally this is completed when someone is selling a home and moving in or out of a home. Basically you are making the home ready for the next owner (or to market the home). The make-ready cleaning will usually include cleaning and sanitizing the following items:

  • Bathroom (toilets, tub, shower/glass enclosure, sink, counters, and faucet)
  • Kitchen (sink, counters, back splash, faucet and all appliances) 
  • All cabinets and drawers (only for move out or move in cleanings)
  • Ceiling fans
  • Shelves/bookcases
  • Dust all services
  • Baseboards
  • Windowsills
  • Doors, knobs and casings
  • Light fixtures
  • Light switches
  • Air vent covers
  • Mirrors
  • Blinds
  • Flooring (normally an extra fee to include shampooing carpet or grout cleaning)
  • Windows (normally an extra fee)

For a move in/out cleaning all furniture, debris, clutter and other trash must be removed prior to cleaning. This is a clean-only service, not a trash-out service. The house must be vacant and the utilities (water and electricity) must be turned on.

Services that are typically not covered:

  • Remove rust stains
  • Remove Paint or Stains from Flooring
  • Remove Grout from Tile or Walls
  • Wipe Down Walls
  • Remove Mold from the Silicon Caulk Around the Tub
  • Carpet shampooing
  • Removal of pet stains
  • Grout cleaning or steaming
  • Window cleaning
  • Home exterior cleaning/power washing
  • Curtain cleaning
  • Laundry

The cost for this type of service will vary based on the home’s condition and size.

Homeowner Yearly Checklist


 

 
As a courtesy to my clients I like to send them reminders throughout the year that might benefit them. I’d recommend that every home owner do a few things at the beginning of the year:
 
2. Make sure your taxes have all been paid. Go to the individual sites and look up your property address.
3. Apply for any home exemption if you haven’t already. (see below)
4. Consider protesting your taxes. Either doing this yourself or hiring a company that will protest them for you (see below)

Home Exemption
Please be advised that you might qualify for a tax exemption and it’s now time to apply. Below you will find further details on this discount and the link for the necessary forms. If you have any questions please feel free to contact me.

Applications for the Homestead Exemption must be filed between January 1st and April 30th.  The process is easy, FREE and it will save you money on property taxes so don’t delay!  There is no need for you to pay anyone for this service.  Most likely, you will receive offers from vendors that appear to be very “official” offering to file your application for a fee.  You need not pay anyone for this service and the county appraisal offices do not charge any fees.

Please note that In order to qualify for the exemption, you must provide:  A copy of your Texas Drivers license or Texas State ID card.  The address on the license or card must match the physical address to your residence for which you are applying.

Tax Protest
As a home owner you can also protest your property taxes every year. You can do this yourself or you can hire a company to do this for you. Most companies will charge you a fee based on the amount they are able to reduce your assessed property value. In my experience the expense was minimal compared to the benefits.
 
There are several companies out there. Do you research before you hire a company. For your benefit here is a list of companies:
 
Bettencourt Tax Advisors

If you decide to protest your assessed value yourself feel free to contact me to review sales in your area.
 

If you are considering selling your home within the next year or would simply like to know the current value of your home, feel free to contact us today.

Selling your home is one of the most important financial decisions you can make. Normally, one’s home is their most valuable asset. A well planned strategy can minimize the amount of time your home is on the market and maximizes your profits.

I am here to help in whatever manner I can. My services include:

  •      Assistance in Real estate sales and purchases
  •      Real estate home staging advise
  •      Local real estate market reports
  •      Real estate professional referrals (for those moving to another state or country)
  •      Real estate leasing (residential)
  •      Other: do you have a unique real estate issue that you need assistance with? I am happy to work with you to find solutions.

It would be our pleasure to answer any questions, just ask! You can reach at the contact info below.

Ali Palacios
GRI, SRS, ABR, MCNE, TAHS, ASPRE, HARRL, CSMS, SMP
Broker
Happy Clients Realty Group
ali@happyclientsrealtygroup.com
Mobile – 832-418-0670
www.ilovehappyclients.com
 
As you know, the local real estate business is more competitive than ever. If you have any friends, family, or colleagues you could refer to me, I promise to provide them with the same excellent service I gave to you—and I will be forever grateful for the referral!

Request your FREE Home Seller Guide