New Insurance Policy Protects Ohio Homeowners' Home Values

There is a new insurance coverage for homeowners that will guarantee the value of your home.  The new insurance policy, being offered by Home Value Insurance Company, is designed to insure homeowners against losses if their home has depreciated when it's time to sell.

The new insurance has just rolled out, starting in Ohio, then continuing to expand in other states.  This coverage is regulated by the state Department of Insurance, and can only be sold by a licensed insurance agent.

Here are the highlights of the new policy:

• Any homeowner can buy a policy, typically at $20 a month for every $100,000 of value.

• The current home value is determined by the sale price of the home, if purchased within the last year, or an appraised value. The value would be locked in for a 10 year period.

• The insurance premium won't go up by more than 5 percent a year.

• If the homeowner sells at a loss at some point in the future, the insurance will pay up to the percentage of value lost, according to the nationally regarded Standard & Poor's Case-Shiller index. So if a community lost 20 percent of its value over recent years, the owner of a $200,000 home who sold at a loss could file a claim for up to $40,000.

• There are high deductibles the first two years: 10 percent the first year and 5 percent the second year. The purpose of this is to deter flipping.


Based on the information provided thus far, it would seem that a homeowner that may consider selling within the next 5 years would benefit the most from such an insurance coverage.  This would be an option for those who relocate for work, foresee an event that will cause them to move in the short-term, or protect from unforeseen events that will require a home sale.

Making a Successful Offer to Buy a Home

So you’ve found the home you want to buy. Now what do you do? I’ve put together some information regarding the process of making a successful offer on a home.

Research Have your Realtor inquire with the listing agent about the seller’s motivation to sell. Sometimes the listing agent won’t give that information, but my motto is “if you don’t ask, you don’t get.” Your agent can also provide you with information such as the last purchase price, the current mortgage balance, property disclosures, how long the home has been on the market, neighborhood statistics and information, school information, etc. The goal here is to paint a picture of the seller’s situation and position.

Determine the market value of the home This can be tricky. The key is to use the most comparable sales based on location, size, age, and condition. The comparable sales should be within the past six months, like an appraiser would do.

The tricky part is when there aren’t enough sales at all, or the sold homes aren’t very comparable to the home of interest. That is when adjustments (i.e. distance, size, condition, etc.) could be considered. Once comparable sales are obtained, pricing adjustments need to be made, based on what each comparable home has or does not have in relation to the home you want to buy. If done correctly, you should be able to determine the value of the home.

Formulate the offer Now that you have a feel for the market value of the home, it’s time to develop an offer strategy. Buying a home is a negotiation. There is give and take, back and forth until both sides come to an agreement. The important thing is to sit down with your Realtor and run through offer scenarios to determine the starting offer amount and how to end at or below the value you attached to the home. Your agent should not be telling you specifically what to offer, but they can advise you based on the data provided. The buyer must always be the decision-maker.

Submitting the offer This is more than just faxing or emailing the paperwork to the listing agent. Your real estate agent should be able to let you know of the negotiating strategies and points that he/she will use to advocate your position. Your agent should be using the market data, comparable sales and other information that has been gathered to educate the listing agent about the factors considered in determining your offer. If your agent is able convince the listing agent that your offer is reasonable (even if it’s not), the listing agent will be more prone to sell your position to the seller.

By establishing your position and being able to back it up with data can greatly influence the ability to close the deal. This is where your Realtor literally earns his/her money. If this can be properly communicated and negotiated by your agent, you’ll be well on your way to getting the keys to your new home!