Does homeowners insurance cover water damage? It Depends

Proving that your policy should cover your losses will not be easy. However, if you have a different interpretation of the language in your policy than what the adjuster suggests, or you have notes from your original conversation with your agent at the time you bought the policy, you can go on to the next step.
The insurance company will assign you an adjuster, who will eventually come to your home and assess the damage.
You pay for homeowners insurance because you must in order to get a mortgage, and you hope you never need to use it. But a variety of ills — natural or human made — can put you in a position to make a claim of loss or damage to property. You hope the coverage you have paid for all of these years will extend to the situation you are dealing with, but you just never know.
In general, water damage caused by accident or mechanical failure of an appliance (washing machine, dishwasher, water heater, etc.) is going to be covered by standard policies. The same is true of a toilet that suffers a sudden leak.
Again, It depends.
Flood damage is rarely covered by a standard homeowners insurance policy. Flood insurance policies are available thanks to the National Flood Insurance Program (NFIP) , but it is pricey.
Do not assume this person is out to prevent you from covering your damages, but remember that the adjuster is protecting the interests of the insurance company to prevent fraudulent claims.

Does Homeowners Insurance Cover Water Damage?

If your policy explicitly states certain items or losses are exempt from your coverage, that is the end of the conversation. However, if you believe your policy should cover the damage you suffered, speak to the agent who sold you the policy, if possible, or ask to have an in-person conversation with the adjuster to discuss the situation.
You may also be surprised to hear that the insurance company can deny your claim, in part or in whole. This is where the insurance company is covering its assets: it will present in written form why it is denying your coverage claim. This letter should provide a complete and specific explanation why your policy does not cover the losses you claim.
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The last step to recover funds would be to sue your insurance carrier, which would require hiring an attorney who specializes in property insurance claims. Get references and verifiable information on previous claims regarding water damage that were settled to the homeowner’s benefit.
When your home suffers water damage, you need to determine the actual extent of damage, and if you can, how the damage was caused.
Ready to stop worrying about money?
Then contact your insurance company to determine if the damage is covered by your policy. This response to this question is not cut and dried, but it is the starting point for recovering some of your losses.
The answer they are given is “it depends,” and such is the way with understanding what homeowners insurance covers and what it does not. Read this story to learn what insurance protects in general.

Making a Claim with Insurance Company

Your homeowner’s insurance policy includes language stating how to appeal a denied claim. Getting involved in a battle with your insurance company may seem like a lost cause, but often, insurance companies can be convinced to adjust their decision to your benefit. “Does homeowners insurance cover water damage?”

Step One: Your Home or Property Suffers Water Damage

According to the National Flood Insurance Program, the average cost of flood insurance for 2021 is 8 annually. That comes out to about a month. 

The answer to the question “does homeowners insurance cover water damage?” is multileveled, just as the water damage might be.

Step Two: Take an Inventory of What Was Damaged

If your home suffers water damage from a backed-up sewer or drain, traditional homeowners insurance doesn’t cover such occurrences. Many companies offer water backup coverage, however.
Earthquakes or floods are often considered an Act of God. Wildfires may also be considered an Act of God if started by lightning rather than humans (campfire gone bad, tossed cigarette and more).

Step Three:  Meet with the Adjuster

Often, standard homeowners insurance policies do cover damage from high winds from natural events like hurricanes and tornadoes. If this is a possible factor in your claim, determine what your policy covers before going onto the next extensive and expensive step.
In most cases, there is a limited time frame in which a denied insurance claim can be appealed, and the time frame begins from the moment you are notified of the denied claim.
Take photos or video of water-damaged possessions, structure or property (actually, it would be wise to take a video of your pre-disastered home right now, so you can refer to post-disaster).

How much homeowners insurance do you need? Our insurance checklist will guide you to make the right decision. 

Step Four: Get the Verdict

You might want to consider improving your chances by consulting a property insurance claims professional. These are licensed public insurance adjusters who can assess your claim from an objective viewpoint and will negotiate with our insurance company for you. Deciding on whether to hire a professional outside adjuster will be based on the cost of his or her service versus the amount of money you hope to recover.
What follows is a simplified representation of what is involved in making a homeowners insurance claim for water damage, including the possibility of having your claim denied and what to do in that event.
If you have not yet been in a position to make a claim against your homeowner’s policy but know someone who has been denied and you worry about your own policy’s virtues, take time to consider your choices in company and coverage.
This is one of the first questions homeowners ask — or should ask — when they are shopping for insurance for their home:

What’s God Got to Do With It?

Most standard homeowners insurance policies include an Act of God provision. From an insurance standpoint, an Act of God is damage that occurs as a result of natural causes with no human component, something that could not have been prevented by proper care or maintenance.
The increased occurrence of wildfires in the Pacific Northwest has made fire protection a must for homeowners in that area. But different companies provide different levels of coverage and full coverage can be expensive. You feel your insurance company is not fulfilling its legal promise to cover the cost of water damage to your home. You have documentation of your losses, a detailed description of the event that caused your damage (malfunctioning appliances or plumbing mishap), and you are in a position where it will behoove you financially to argue your case.
Here’s hoping this helps and that you never need it.
The adjuster will eventually call you with a detailed list of what the company is going to cover, the amount it will give you for your lost or damaged items, and what structural damage the company will pay to be repaired. You may or may not like the dollar figures the adjuster offers.

How to Fight a Denied Claim

But, first, let’s look at all the ways your home can be damaged by water, and the chances that your homeowners insurance will cover your loss in that event.

Pro Tip
Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013. He is a contributor to The Penny Hoarder.

Coverage for water damage is separated into dwelling damage and personal property damage, What is not covered is replacement of the appliance or machinery that caused the water damage. If your dishwasher develops a sudden leak which causes damage to your home, the structural damage and personal property damage likely will be covered but the cost of replacing the dishwasher will not.
Below, you can find what to do when you need to contact your insurance company because you have suffered property loss or your home is damaged. Then you will find out what to do when your claim is denied.
But, if the water damage is a result of poor maintenance, such as broken pipes, mold or rotting pipes or water lines, the claim is likely to be denied.
Homeowner’s insurance policies spell out which Acts of God are covered. For instance, floods are Acts of God, although homeowners in flood plains or near coasts or lakefronts can purchase flood insurance at an additional cost.
Source: thepennyhoarder.com <!–

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The adjuster will require a list of lost or damaged items with an estimated value of those items, and will assess structural or property damage that will require estimates to determine repair costs. Putting together a list of the valuable contents of your home is another thing to do before disaster strikes.

4 Tips for Buying a Fixer-Upper

In this article:

While the process of buying and renovating fixer-upper homes has increased in popularity due to fix-and-flip home improvement TV shows, not everyone is cut out for  major renovation projects. 

In fact, only 19% of homeowners said their home needed serious updates, and only 3% said their home needed a complete overhaul, according to the Zillow Group Consumer Housing Trends Report 2020. 

Buying a fixer-upper involves purchasing the least desirable home on the block and overseeing its transformation. Whether you’re considering a fixer as an investment — and you plan to sell after construction is complete — or you’re fixing up a home to make it your own, there’s a lot to consider when buying a fixer-upper, from home price to construction costs to financing. 

What is a fixer-upper home?

A fixer-upper is a home that needs repairs, but not so many that it’s uninhabitable or worthy of being torn down. 

Fixer-uppers are usually offered for a lower price than homes in better condition, which makes them appealing to buyers looking to maximize their purchasing power or investors looking to flip the property and turn a profit. 

Should I buy a fixer-upper home?

Most often, people buy fixer-upper homes because the cost of purchasing the home plus renovation costs may total less than what they’d pay for a comparable home in good condition. 

Here are some of the key reasons buyers decide on buying a fixer-upper:

Reduced price

If you have your eye on a popular neighborhood, either for resale value or your own lifestyle, you may be able to get a better deal buying a fixer upper in your desired location and renovating it than purchasing an already-updated home. 

Customizable improvements

When you purchase a fixer-upper, the sky’s the limit when it comes to fixtures and finishes (within your budget, of course). Renovating a fixer-upper can be ideal for buyers with very specific tastes or those who want more control over the aesthetics of their home. When buying a fixer-upper, you avoid paying for the renovations someone else completed, especially if you don’t like them. 

Older home charm

The character of older homes isn’t easy to replicate. Buying an older home in need of some TLC can allow you to restore and maintain time period details, while bringing the home up to today’s efficiency, safety and comfort standards. 

Make a profit

Whether you’re planning to flip or live in the home for a few years before selling, you may be able to turn a good profit based on the renovations you make. Your return on investment depends on the types of renovations you complete, the materials you use and the quality of the work. If profit is the goal, select popular home improvements in your market to increase property value and appeal to a wide variety of buyers. 

Tax incentives

In some metropolitan areas, such as Philadelphia and Cincinnati, buyers who purchase a fixer-upper and renovate to improve the property value may be eligible for a tax abatement or credit. 

How to find fixer-upper homes

Finding the right fixer-upper is all about where you look. Here are a few strategies for finding the right home. 

Search online: Use Zillow to search for homes below market value. You can search keywords such as “fixer upper,” “needs work” or “TLC” to narrow down potential properties. 

Work with an agent: A local buyer’s agent should be able to help you find fixer-upper homes in your desirable neighborhoods. Well-connected agents may even be able to show you homes that haven’t hit the market yet, via word of mouth. 

Search auctions, foreclosures and short sales: Distressed properties may be in fine structural condition but are sold below market value in order to offload them quickly. It’s important to note that these homes are usually sold as-is, and disclosures might not be available, so be sure you have enough extra money in your budget to cover surprise issues. 

What to look for when buying a fixer-upper home

When shopping for a fixer-upper, prioritize the things you can’t change about a home (like its location), or things that would be too costly to change (like significant structural renovations). Here are key factors to consider:

Location

Location is the most important thing to look for, because it can’t be changed. Look for a fixer-upper in a desirable or an up-and-coming neighborhood in order to maximize potential resale value. Finding the right location will also ensure that you’re happy in the home. Pay attention to things that might be important to you, like school ratings, nearby parks and restaurants and commute times. 

The home’s location will also play a part in determining your renovation budget and estimating the home’s post-renovation value. The quality of finishes and upgrades you select should be in line with comparable homes in the same neighborhood if your goal is to recoup costs on resale.

Layout and size

With a fixer-upper, you might be able to change the layout as you see fit, but pay attention to any design and layout ideas that would require removing load-bearing walls. This can be a costly exercise, and sometimes it’s just not possible. Home additions to increase square footage are also expensive and might not be allowed, depending on local zoning requirements and laws. 

Home condition

There’s a difference between a fixer-upper and a home with significant structural defects. Structural and mechanical problems are a lot more expensive to fix than cosmetic ones. Be sure to hire a home inspector to gain knowledge of the home’s positives and negatives — hiring a home inspector is an invaluable step, even if you’re buying a home as-is. Here’s what should be on your home inspection checklist for a fixer-upper:

  • Strong foundation
  • Up-to-code electrical
  • Proper plumbing
  • Solid roof condition (should come with roof certification)
  • HVAC and/or central AC
  • Functional windows

Straightforward cosmetic updates

Prioritize homes that have outdated or worn out finishes that don’t appeal to the general public but can be updated affordably and without too much effort. Ideally, the fixer-upper you buy will only need cosmetic upgrades. Look for homes with:

  • Peeling or dated paint (interior and exterior)
  • Older bathroom fixtures and tile
  • Dated kitchen cabinetry
  • Laminate or tile countertops
  • Stained carpeting
  • Hardwood floors in need of refinishing
  • Leftover belongings or trash that need to be removed
  • Neglected landscaping
  • Old or non-functioning appliances

How to buy a fixer-upper

Buying a home that needs work can be risky, because you won’t know the full condition of the home until you start tearing down walls. That’s why doing your due diligence on the property and neighborhood ahead of time is key.

Get a professional home inspection

When you put an offer on a house, be sure to include an inspection contingency. An inspection contingency allows you to back out of a deal and get your earnest money deposit back if the inspection reveals that the home has serious hidden defects.

Even homes marketed as being in “as-is condition” can be inspected — the only difference is with an as-is home, the seller is telling you that they do not want  to make any repairs based on your findings. 

The buyer is responsible for the cost of  an inspection, which ranges between $250 and $700, depending on the size of the home and your location. In addition to a general inspection, you might also opt for specialized inspections for trouble areas. Common specialty inspections include pests, sewer lines, radon, lead-based paint and structural inspections. Costs for specialty inspections are similar to general inspections. 

A structural inspection reviews the home’s structural integrity, but also lets you know of any natural hazards nearby that could impact the resale value or your own health and safety. You may also consider hiring a structural engineer to assess the property before you make an offer. It will cost between $500-$700 but could save you thousands of dollars in future foundation repairs.

Hire an architect and general contractor

An architect can create a new layout for a home, create plans and blueprints and tell you what is and isn’t possible. Some cities require you to submit architectural plans to acquire home permits, making an architect a necessity. The average cost for an architect is around $5,000, depending on the scope of your project. 

Your home inspector should be able to give you a rough estimate of what it would cost to adequately repair problem areas that come up in an inspection, but since they’re not the one who will be doing the work, it’s best to get a more accurate quote from a contractor. Whatever they quote you, add a 10% contingency for any problems that come up along the way. Be sure to get quotes from a few contractors and do your due diligence in checking their licensing and customer reviews. 

Budget for improvements

Working with your contractor, be sure that your budget takes into consideration all applicable costs. Don’t forget to include:

  • Permit fees, if applicable
  • Cost of materials, like flooring, paint, light fixtures, cabinetry, countertops and hardware
  • Cost of labor, including general contractors, plumbers, electricians and inspectors
  • Cost of living during renovations, if the home will be uninhabitable during the project

Know your limits

Above and beyond the financial concerns, you also need to gauge your tolerance for a major renovation project, especially if you plan to save money by doing some of the work yourself. Home renovations are not as easy as they look on TV and if it’s your first time, a lot can go wrong. Even if everything goes right, there’s a lot of hassle involved in a large-scale construction project. You’ll have to live in a construction zone or move elsewhere temporarily, while still paying all the carrying costs for the home. 

If the thought of a months-long renovation is more than you’re willing to take on, but you’re looking for a move-in-ready home, consider a Zillow-owned home. Every home has been recently repaired for buyers to avoid costly surprises. 

Financing options with fixer-upper loans

You can purchase a fixer-upper with a traditional conventional loan then pay for all the improvements out of pocket. Or, you can get a fixer-upper mortgage that’s designed to help you finance both the house itself and the renovations. Common types of home loans for fixer-uppers are: 

FHA 203(k) standard

An FHA 203(k) Standard loan finances the purchase and renovation of a primary residence. Here are the key requirements:

  • Minimum credit score of 500 with a down payment of 10%, or a credit score of at least 580 with down payment of 3.5%
  • The total cost of the loan must fall under FHA mortgage limits in your area
  • No luxury improvements (like pools) are allowed, but structural work is allowed
  • Requires a HUD consultant to approve the architectural plans, oversee payments to contractors and review inspections to ensure the home meets structural integrity and energy efficiency standards
  • There are limits on how soon you can resell (not within 90 days)
  • The contractor is paid out of an escrow account managed by the lender

FHA 203(k) streamlined

This financing option has similar requirements as the FHA 203(k) Standard, but it’s meant for simpler, cosmetic renovation projects, as it has a spending limit. 

  • Minimum credit score of 500 with a down payment of 10%, or a credit score of at least 580 with down payment of 3.5%
  • For cosmetic upgrades under $35,000
  • There are limits on how soon you can resell (not within 90 days)
  • The contractor is paid out of an escrow account managed by the lender

HomeStyle loan

A HomeStyle loan is a combination home loan and home improvement loan, guaranteed by Fannie Mae. 

  • Minimum credit score of 620; minimum down payment of 3 or 5%, depending on a few factors like owner occupancy, first-time home buyer status and income
  • Allows for other improvements that aren’t covered under an FHA 203(k), like pools and landscaping—but note that all improvements need to be “permanently affixed to real property (either dwelling or land)”
  • The contractor is paid out of an escrow account managed by the lender
  • You must use a certified contractor

CHOICERenovation

A CHOICERenovation loan is a combination home loan and home improvement loan, guaranteed by Freddie Mac. 

  • You can finance renovations that cost up to 75% of a home’s value
  • Money can be used for upgrades that prevent natural disasters
  • You can DIY the work and get a down payment credit
  • Requires multiple appraisals to ensure you’re upholding the terms of the contract and that the agreed-upon renovations make the home meet its estimated value

Source: zillow.com

How the Pandemic Has Changed House Hunting

Before the pandemic, your living space seemed adequate. But, when it became necessary to create a viable work space in your home, the house suddenly became tiny. If you lived with someone else working from home, two work spaces were needed. Your home became the place where you ate, slept and binge watched plus your office, and in some cases, a classroom for children.
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For decades, being close to water, especially the coast, was desirable if not always attainable moneywise. But climate change and rising water temperatures has made coastal living too risky for some as serious storms and flooding in those areas become more common. Areas prone to wildfires are also being considered more carefully.
If you are going to be working remotely and don’t need to use a car to get to your office, an urban location might still be in the cards, depending on how much space you need.

Location, Location, Location

The decision to purchase a home is one of the biggest of your lifetime. Due to the pandemic, climate concerns and remote working possibilities, it has become more complicated than ever.
There are four financial questions you should answer before buying a house. But there are other considerations too. Consider which of the following topics apply to you and how they impact your decision to purchase a home.
Location has always been a huge factor in buying a home. Can the kids walk to school? And is the school any good? Is there public transportation nearby? How far to the grocery store? Can I get to work quickly?
Don’t you hate it when your parents’ advice turns out to be correct?
Transportation is another issue. The farther you move from an urban setting, the more you are likely to need to use your car. Many young adults today are embracing the climate-friendly urban lifestyle in which they use public transportation to get around rather than own a vehicle.
In most cases, buying a home requires gainful employment, and you (and perhaps your spouse or partner) have that. Prior to the pandemic, another major consideration for homebuyers was the location of the new home relative to their place of work or even the attributes of the neighborhood.
If you are going to need more space in your new home in order to make remote employment situations work, you will need to balance your need for space with your budget for a mortgage. (Lucky for buyers that interest rates are low. It is unlucky for buyers that inventory is also low and sellers are reveling in higher prices.) That could require moving farther away from an urban setting to find a suburban location where the size of the home matches the size of your budget.

How Much Space Do You Need?

But that may not be an option if the other considerations (space, budget) force you to move to the ‘burbs.
So, in terms of your own work situation, you may not need to be near your office anymore. If you are only going to go into the office twice a week, how close do you need to be?
Although demand today far outweighs supply, giving sellers a financial edge over buyers, mortgage rates remain very low. If you are going to need a mortgage to purchase your home, now is the time to acquire one, if you are going to qualify. Shopping for mortgage rates online may be the wise choice.
You need a pros and cons list. You actually need more than one pros and cons list (location, space, cost, transportation). And you need a list of priorities.
Besides location, size/style, home prices, down payment, interest rates and monthly payments, there are other factors to consider now. Remote work initiated by the pandemic is one, but the worldwide health crisis has also reversed the trend of smaller places. Home office space is now on many buyers’ wish lists. Zillow reported in December 2020 that 48% more of its listings were touting a “home office” or “Zoom room.”

What About Climate Change?

The meaning of location, location, location has changed.
A decade ago, working remotely was seen as a positive perks resulting from digital communication (with stories of adventurous types, especially tech professionals, taking their jobs with them to tropical locales), but, in 2020, working remotely became a necessity.
Source: thepennyhoarder.com
With all of the above thoughts running through your mind, you have still another matter to consider, and that is timing. When do you need to make a decision on buying a home?
But, then, that consideration runs headlong into another consideration …

Timing is everything

These are extreme situations but a recent survey published on Stanford.edu said that 68% of millennials, the oldest of whom are turning 40 this year, are interested in buying and living in areas less known for natural disasters.
Despite the addition of these factors, home ownership remains a stable investment because the money you spend on rent goes instead to decrease your mortgage and increase your true ownership in the property you have chosen. Mortgage rates are low — for now — but so is inventory, and in most areas that means prices are high.
The Federal Reserve board has indicated that there will be no federal interest rate increase until at least 2022, but the American economy is expected to continue to grow in the post-pandemic climate. Such growth could lead to interest rate increases next year to protect against inflation. One thing seems certain: if you need to buy a home, and cost is a concern, now is the time to do so.

Decisions, Decisions

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In May 2021, some companies welcomed back employees into safeguarded in-office environments, while some offered employees a hybrid of in-office and at-home situations. Still others, realizing they could exist and benefit from an all-remote work staff, are closing their physical offices, or reducing their office space significantly.

  • Do I need to buy a home now?
  • Do I need to live in a particular location?
  • Am I going to be working from home, in an office or a hybrid situation?
  • How much space do I/we need?
  • Which of the above factors takes precedence?

And how solid is your current employment status? If making a home-buying decision based on location related to your employment situation, are you going to be staying in that position and with that company for a long time to come? Does that play into your decision to buy a home?
For years, there has been a move toward smaller, more efficient and environmentally friendly homes. They may not all have been tiny houses but they were smaller. In 2021, the National Association of Home Builders reported more interest in larger homes — people want space. <!–

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So is your home going to be your office going forward? Will there be occasions where multiple people need to work at home at the same time, and is one of you willing to use the kitchen or the basement or the garage as a makeshift office?

What Are Comps? Understanding a Key Real Estate Tool

Whether you’re buying or selling a home, comparing similar homes can yield a wealth of helpful information.

“Comps,” or comparable sales, is a term anyone on either side of a real estate transaction should know well. It refers to homes located in the same area and very similar in size, condition and features as the home you are trying to buy or sell.

Buyers look at comps when deciding what price to offer on a home, and sellers use comps to figure out how to best price their home for the market. Real estate agents look at comps all day long as a way to keep on top of their local market. If you are a buyer or seller, it’s helpful to have a strategy to analyze comps, because all comps aren’t created equal.

Location is the highest priority

If you are trying to price a home or figure out its value, you need to look nearby. The market is based on location, so keeping as close to the subject property as possible — meaning, within the same neighborhood — is the most effective approach.

If you can’t get enough comps nearby, it’s fine to keep expanding out. But there will always be a boundary, like a school district, that you need to stay within.

Timeframe matters

The best comps are homes that are currently “pending.” Why? Because a pending home is a piece of live market data. A pending home means that a buyer and seller made a deal, and that deal will reflect the most up-to-the-minute stats on the market.

A good local real estate agent, leveraging her network, can get a fairly accurate idea what the ultimate sale price or range is for a pending deal. Try to stick with sales in the past three months, and never go more than six months, because older data is not reflective of the current market.

Factor in home features

Once you have location and timeframe, it is key to look for homes with similar features that have sold, as opposed to comparing price per square feet. While the latter is helpful, it won’t consider factors like views, a new designer kitchen or a finished basement vs. unfinished.

If you have all three bedrooms on the top floor, look for something similar. Try to compare your subject property to like properties when it comes to traits like total size, the number of bedrooms and bathrooms, and the size of the lot. You can make adjustments once you have found similar homes.

Don’t overanalyze the comps

Putting your trust in a good local agent will keep you from agonizing over the petty details of each comparable home. Your agent is likely familiar with some of the recent sales, and can help shed light on why one comp fares better than another. You may not know that one home was next to a fire station or across from a parking lot, or that another didn’t have a real backyard, but your agent will. These small nuances will affect the home’s value.

Find your home on Zillow to see your Zestimate® home value with your comps.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Source: zillow.com

What Are Comps? Understanding a Key Real Estate Tool

Whether you’re buying or selling a home, comparing similar homes can yield a wealth of helpful information.

“Comps,” or comparable sales, is a term anyone on either side of a real estate transaction should know well. It refers to homes located in the same area and very similar in size, condition and features as the home you are trying to buy or sell.

Buyers look at comps when deciding what price to offer on a home, and sellers use comps to figure out how to best price their home for the market. Real estate agents look at comps all day long as a way to keep on top of their local market. If you are a buyer or seller, it’s helpful to have a strategy to analyze comps, because all comps aren’t created equal.

Location is the highest priority

If you are trying to price a home or figure out its value, you need to look nearby. The market is based on location, so keeping as close to the subject property as possible — meaning, within the same neighborhood — is the most effective approach.

If you can’t get enough comps nearby, it’s fine to keep expanding out. But there will always be a boundary, like a school district, that you need to stay within.

Timeframe matters

The best comps are homes that are currently “pending.” Why? Because a pending home is a piece of live market data. A pending home means that a buyer and seller made a deal, and that deal will reflect the most up-to-the-minute stats on the market.

A good local real estate agent, leveraging her network, can get a fairly accurate idea what the ultimate sale price or range is for a pending deal. Try to stick with sales in the past three months, and never go more than six months, because older data is not reflective of the current market.

Factor in home features

Once you have location and timeframe, it is key to look for homes with similar features that have sold, as opposed to comparing price per square feet. While the latter is helpful, it won’t consider factors like views, a new designer kitchen or a finished basement vs. unfinished.

If you have all three bedrooms on the top floor, look for something similar. Try to compare your subject property to like properties when it comes to traits like total size, the number of bedrooms and bathrooms, and the size of the lot. You can make adjustments once you have found similar homes.

Don’t overanalyze the comps

Putting your trust in a good local agent will keep you from agonizing over the petty details of each comparable home. Your agent is likely familiar with some of the recent sales, and can help shed light on why one comp fares better than another. You may not know that one home was next to a fire station or across from a parking lot, or that another didn’t have a real backyard, but your agent will. These small nuances will affect the home’s value.

Find your home on Zillow to see your Zestimate® home value with your comps.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Source: zillow.com

3 Situations Where It Pays to Buy a Fixer-Upper

You finally found “the house,” but it needs some work. Will it be a money pit or a money maker?

It’s every home buyer’s worst nightmare: Finding a house within striking distance — of your price range and work— that quickly turns into a money pit.

On the flip side of the fixer-upper experience is someone like Jordan Brannon, a director of digital strategy in Spanaway, WA, near Tacoma. Although he’s sunk considerable money into his two-story, late-1990s home, he feels it was a good investment.

“It was about finding a home that we could add value to — and could purchase at a below-market rate,” he says of his 3,000-square-foot home. But there was one crucial caveat: “The fixer-upper work that we wanted to do, we had to be able to do.”

While that fixer-upper you’ve got your eye on may not be the steal you’re expecting — the average fixer-upper lists for just eight percent less than market value, according to a new analysis from Zillow — it’s still a tempting prospect for many buyers.

Should you make a fixer-upper your next home? Here are three scenarios where the answer may be “Yes!”

When the upgrades are simple

Knowing that hiring contractors was out of the question — in part because Brannon works from home — Brannon and his wife focused on finding a home they could revamp themselves.

This meant forgoing homes with any foundation, electrical, or plumbing issues, and eyeing properties where cosmetic upgrades were the name of the game.

This isn’t to say the couple didn’t put in a lot of hard work; the project took nearly three months.

“We basically gutted the first floor down to drywall — did a full repaint, with all new trim; replaced the kitchen cabinets and countertops, and added new light fixtures and door handles,” Brannon says. New toilets and sinks are recent installments.

“The home looks 10 years younger, and feels cleaner and brighter,” Brannon remarks. “We’re more comfortable living in it, and I’m confident we’ve made an improvement in the home’s resale value.”

Combined estimates from contractors put the value of the improvements around $55,000, minus one bathroom. Altogether, Brannon says the couple spent about $15,000 on the work, plus 240 hours in labor (yes, he’s been tracking). For Brannon, it was a worthwhile endeavor.

When the numbers add up

“Fixer uppers [only] make sense as long as the numbers pencil out,” says George Vanderploeg, a luxury real estate broker with Douglas Elliman in New York. In other words, “Is the money that I have to put into it going to make the property worth at least that much when I do it?”

In general, people will price a property based on what others sell for, Vanderploeg explains. “If I were just to pick a block in Manhattan, say on 63rd Street, between Lexington and Third Avenue, the renovated townhouses there might sell for $3,000 per square foot,” he continues. “An un-renovated townhouse might sell for maybe $2,000 per square foot. If you have the money to put in, it may all work out.”

Of course, for many home buyers, especially those without a big — or any— renovations budget, this is easier said than done.

When the timing is right

Every municipality has a building code, says Vanderploeg, and the work that you do on the home must fall within legal bounds. “An architect usually will supervise the work, and then at the end of the process, they’ll sign off on it,” he says. However, this can be time-consuming.

You can also run into hurdles if your contractor falls behind schedule, has trouble staying on budget, or is just unreliable. “Where people go wrong sometimes is having a bad contractor,” says Vanderploeg.

If you’re unable to live in the home or get stuck waiting for permits, you could also find yourself in a bind. “Sometimes we have to find people a place to live for six months to a year while they’re waiting for something to be finished,” Vanderploeg adds.

For these reasons alone, homeowners need to be clear-eyed about the renovation process.

Remember, committing to upgrade a fixer-upper is more than a labor of love — it requires a time and financial commitment. But if you’re willing to go all in, think about the bragging rights!

Hear about one family’s fixer-upper experience:

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Source: zillow.com

Why Is My Lender Asking About My Race on My Loan Application?

It may seem odd, but the government requests this personal information for two important reasons.

At some point in the mortgage application process, you’ll get asked questions about your race, ethnicity, gender, and age. Being asked to provide this information can often raise a question of your own: Why?

Let’s answer that question now.

Clearing up anti-discrimination laws

A law called the Equal Credit Opportunity Act (ECOA) enacted in 1974 makes it illegal for lenders to discriminate based on race, national origin, gender, age, marital status, or because one receives public assistance.

Another law called the Home Mortgage Disclosure Act (HMDA) enacted in 1975 requires lenders to collect, report, and disclose a long list of data about mortgages they originate, including each borrower’s race, ethnicity, gender, and age. This HMDA data helps regulators determine if lenders are serving the housing needs of their communities, identify possible discriminatory lending patterns, and assist public officials in making community housing investment decisions.

So ECOA says lenders can’t use race, ethnicity, gender, and age to make loan decisions. And HMDA says lenders must ask for race, ethnicity, gender, and age to monitor for discriminatory patterns.

How are these questions asked in the loan process?

A form called the Universal Residential Mortgage Application contains all of the borrower questions required by federal law.

Your age is obtained by requesting your date of birth.

Race, ethnicity, and gender are requested in a specific categorical format required by federal law.

The fine print of this section in a loan application contains three concepts that are especially important:

  • You are not required to provide this information, but are encouraged by the government to do so.
  • The law provides that a lender may not discriminate either on the basis of this information, or on whether you choose to furnish it.
  • If you’ve made the application in person and do not furnish ethnicity, race, or gender, federal law requires your lender to note the information on the basis of visual observation and last name.

You should also note that as technology streamlines your application process, these questions may not be asked or visually presented in this format — but they will be asked.

Changes to these questions coming soon

HMDA rules are enforced by the Consumer Financial Protection Bureau (CFPB), and the CFPB has already made new laws to improve HMDA data collection. The new laws go into effect on January 1, 2018.

It’s worth knowing about these changes now because lenders will be working toward these changes between now and January 2018.

Revised HMDA laws fine-tune requirements for lenders when collecting race, ethnicity or gender from borrowers who choose to furnish this information versus those who choose not to furnish it.

If a borrower chooses to provide race and ethnicity under the revised laws, they will get an expanded set of categories to select from.

However, if a borrower chooses not to provide race and ethnicity when applying in person, the lender must use the same categories while following the same visual observation and last name requirements they follow today.

The CFPB ruled  that allowing borrowers to self-identify using newly expanded categories and requiring lenders to identify (when borrowers choose not to) using today’s limited categories is the best balance of consumer protection and lender regulatory burden.

What to do if you feel discrimination has occurred

As you can see, our federal regulators think deeply about consumer protection, but no law is perfect at interpreting your individual loan experience.

If you are concerned about mortgage discrimination or believe you have been discriminated against, follow the CFPB’s complaint process, or call the CFPB at 855-411-2372.

Related:

Source: zillow.com

How to Find Your Dream Home

Ready to start searching listings and hitting open houses? Save yourself some time by first identifying exactly what you need and want in a home.

You’ve been pre-approved and know what you can afford, so it’s time to start home shopping. But the hunt for your dream home will stall rapidly if you don’t know what that “dream” looks like.

It’s easy to talk in generalities about wanting a “big” house or an “older” home. But in order to better target your real estate search, you must think specifically about your dream dwelling. Will your “big” house be 2,400 square feet or 5,000? When you say “older” home, do you mean one built pre-1900, or pre-1980?

Before you visit another open house, sit down and make a list of your needs and wants — and yes, those are two different things. You may want a pool, but you probably could live without it. (Plus, it’s worth considering that having a pool could raise your home insurance costs.)

Understand that your requirements list will likely change as you learn more about your housing options. Proximity to the beach may start as a priority, for example, but once you see the size of ocean-front homes you can get in your price range, you may decide a short drive to the water is quite bearable. Unless you have an unlimited budget, it’s likely you’ll need to make compromises along the way.

Use these questions to help make your very own list of housing requirements.

Find-Your-Dream-Home-Blog-r2

You should also take time to rank specific home features as “Must Have,” “Like to Have” or “Don’t Care” using this printable checklist. Identifying your priorities will help you find the perfect property.

Once you know what you’re looking for in a home, you’ll be ready to find the right agent to partner with for your search.

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Source: zillow.com

Managing Your Money, Together

To learn more about how our Minters are achieving their financial goals, we reached out to everyday Mint users, just like you, to hear their stories. Whether it’s paying off student loans, or working toward buying a home, we’re so inspired by the dedication this community has shown in working toward your goals and dreams.

One of the Minters we connected with is Jordan. He shared with us how he’s used Mint to reach a number of his financial goals. Check out his #EmpowerMint story:

My wife and I have been interested in getting out of debt ever since the day we took on student loans. With the desire to pay those loans off, we strived to learn more about budgeting and personal finance.

As we grew in our journey, there were many financial things we questioned that felt ‘normal.’ We heard so many messages that emphasized the need to have the newest toys to be happy, that having debt is normal, and that most people live paycheck to paycheck. We realized that we didn’t feel comfortable with any of that, and that we found satisfaction in being content with what we have. 

Knowing that money issues were often a problem area for couples, my wife and I started using Mint shortly after we got married in 2010 to ensure transparency and partnership from the beginning. We found Mint to be a terrific tool for us to have a complete picture of our financial situation. During this time, I was working full-time and my wife was finishing up her last year in nursing school. Mint was an immediate help in keeping track of where our money was going and in starting budget discussions that have proved to be invaluable in our marriage. It also helped initiate discussions on both near-term and long-term goals, which have been so key in helping us plan both strategically and aspirationally. 

As time went on, Mint was instrumental in helping us achieve so many of our goals including:

  • Paying off student loans
  • Paying for grad school with cash
  • Preparing for kids
  • Starting a 529
  • Saving for a down payment
  • Buying a home

Our current goal is to complete our 15-year mortgage in under 5 years. A combination of Mint, aggressive savings, overtime shifts, and side hustles have helped put us in a position to achieve this goal within the next 12 months. Once that goal is complete, we’re excited to have a little fun and celebrate this accomplishment, and then prepare for the next chapter in our financial journey. 

In addition to this goal, we also have various net worth milestones we would like to achieve in the next 1-, 5-, and 10-year periods. We are very excited about the concept of financial independence, and would like to be in a position where we have the opportunity to focus our attention on things outside of work, such as further investing in our family and causes that are important to us. With Mint, we can see how the choices we’re making are helping move us closer to achieving these goals. 

Today, we check Mint on a daily basis in order to stay on top of our expenses and monitor for any fraudulent activity. Years ago, Mint helped me identify a fraudulent charge almost immediately, enabling me to notify our bank and get the issue resolved. Reviewing our expenses enables us to stay within our budget, catch fraudulent activity, and follow the ‘every dollar’ budgeting rules that have been so helpful for us. In addition, linking our accounts has automated what would otherwise be a very manual and time-intensive process. 

I have also loved using the trends feature to have full visibility into exactly how our money is being spent and to help ensure we’re always partnering as we work towards our financial goals, rather than feeling like one person is pulling the other along. We can budget with transparency and not feel any need to hide transactions for personal expenses and rewards or small splurges. 

The trends feature has also allowed us to get a sense of what our typical spending has been in different categories. We periodically review our budget, and being able to easily see our historical spending in different categories has helped us set realistic targets, as well as track our progress when we are attempting to change habits. Lastly, being able to see changes in our net worth over the years has been inspiring, as we have been able to see in real-time how decisions to save or forego immediate gratification can have long-term benefits.

Beyond that, we have found a great deal of joy in doing things ourselves, whether it is cooking meals for the week, doing our own car maintenance, or trying to fix something ourselves before calling someone. Additionally, the satisfaction has compounded as we’ve seen that making these choices has helped us not only learn new things, but also in achieving our goals. 

Knowing what we know now, we’re really excited to pass these values on to our kids, and we’re happy to discuss them with anyone who asks. Additionally, I can see a ‘life’ after work that involves volunteering in some form in the personal finance field, whether that is teaching folks about budgeting or just encouraging them in their financial journey.

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