New Home Finder

Bigger share of newly built homes on the market Don't think you need flood insurance? By Marilyn Kennedy Melia CTW FEATURES This year, home seekers who do buy are more likely than ever to purchase a new home. Redfin reports that in December of 2021, newly constructed homes represented a 34.1 percent share of all homes for sale, a record high. Such a big portion is new construction pri- marily because there's such a very low supply of existing homes on the market, explains Robert Dietz of the National Association of Home Builders. While buyers must often win a bidding war in the existing home market, battles aren't as common when buy- ing new construction. Typically, "developers will sell at the price they ask," says Hunter Andre, a real estate agent with Baird & Warner in Chi- cago. If buyers specify the type of home they're looking for, and they're not intent on purchasing in an existing neighbor- hood, a real estate agent should show both new and existing properties that fit the bill, Andre says. Jeff Benach of Lex- ington Homes says that about one-half of the customers in its Chicago-area develop- ments use a real estate agent, and half find the properties on their own. The website Newhome- source.com provides one way for buyers to scout for developments. New-construction buyers probably won't be able to move in quickly — unless they're buying a home that's already or mostly constructed. Many builders are wait- ing to secure a buyer before starting a home because rising material costs and worker short- ages make the pricing of offerings uncertain. When a buyer signs a contract, he or she pays the price the builder an- ticipates then and is also required to make a down payment, which might be 5 to 10 percent of the price. If the buyer is de- pending on profits from the sale of his current home for that down pay- ment, he would need to secure a home equity line first, since lenders typically don't loan on for-sale properties. Securing financing first, and then selling before their newly con- structed home is ready, are the next steps these buyers must finesse. By Erik J. Martin CTW FEATURES Millions of Americans are wet behind the ears and putting their homes and livelihoods at risk based on two incorrect as- sumptions: Their homes are safe from floods. Even if it does flood, their homeowners insurance will cover the damage. The latter notion is borne out by the results of a recent study by Policy- genius, which found that 53.3% of homeowners polled aren't aware that a typical homeowners insurance policy does not provide flood insurance protection. Experts say this find- ing is a wake-up call and sobering reminder not to take flooding or existing insurance coverage for granted. "Homeowners insur- ance covers many situa- tions and perils, including some kinds of water dam- age, so it makes sense that people would assume floods are also covered. But it's important to know that floods are not covered by homeowners insur- ance because floods are a very common natural disaster that can lead to expensive repairs for your home," says Fabio Faschi, property and casualty op- erations manager for New York City-headquartered Policygenius. "It's trou- bling that more than half of our survey respondents don't realize floods aren't covered." Warren Barhorst, CEO of Iscential in Houston, wasn't surprised by these survey results. "Most homeowners are forced to purchase homeowners insurance as a requirement of their mortgage without truly understanding the exposures they face every day. Consider that there is a 100% chance of dying, yet only about 2% of Americans have adequate life insurance coverage. And there's a 25% chance of your house flooding over the course of your 30-your mortgage — however, only about 15% of people purchase flood insur- ance," Barhorst explains. Richard D'Angelo, president of StormScope Public Adjusters in Ha- nover, Pennsylvania, recommends flood insur- ance for any homeowner in a climate zone that has rainy seasons. "Storms and severe weather events are only becoming more frequent with climate change. I suspect we will start to see increased flood- ing events in areas that aren't even FEMA- designated flood zones," he says. "Having cover- age against all perils can help ensure that no mat- ter what happens, you are covered." Flood insurance is a separate policy from your conventional homeown- ers insurance policy. It only covers your home if a flood compromises it, explains David Such, a public adjuster at North Providence, Rhode Island- headquartered Perfor- mance Adjusting, Public Insurance Adjusters. "You can purchase flood insurance through the National Flood In- surance Program (NFIP — a division of FEMA), which is sold through private insurers and ad- ministered by the federal government. Or, you can purchase flood insurance through private market insurers," Such notes. "Typically, flood insurance covers the building, con- tents within, other struc- tures around the home and temporary relocation if necessary. A private flood insurer can usu- ally offer higher limits of coverage versus an NFIP policy." If you are in a desig- nated flood zone, it's often best to get flood insurance coverage equal to or close to that of your typical homeowners insurance policy. "If you are not located in a flood zone, I would recommend coverage equal to approximately 50% to 75% of your homeowners policy, given that there is a lower risk that a flood may happen," he adds. Barhorst advises in- suring up to $250,000 for your home and $100,000 for its contents. "If your home and contents are more valu- able and your property has a higher propensity for flooding, I recom- mend excess coverage to enhance the limit and meet your specific needs," Barhorst says. Faschi points out that flood insurance does not cover internal flooding and water damage — such as if your plumbing leaks and causes a flood in the basement. To protect against these perils, you can add a water backup coverage endorsement to your homeowners insur- ance policy. The cost of flood in- surance will vary based on the flood zone you live in, your home's age and build, and how much coverage you need. "The average cost of an NFIP flood insurance policy is $707," notes Faschi, citing recent data provided by FEMA. th UPCOMING PUBLISHING DATES: May 20 & 22• SepteMber 23 & 25 19 H8 BAY AREA NEWS GROUP 001 Homes | Advertising Section

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