Real Estate: Is damage from water in my basement covered by homeowner's insurance?

By Jonathan Priest

Q: My wife and I bought a new house and we suspect the basement may have flooded in the past. It's not my first home, but it is my first basement, and I like to be prepared. If flooding happens in my basement, will my homeowners' policy cover the damage?

A:  The last thing any homeowner expects or wants to see is water in the basement, but it's the type of thing that can occur. Whether your incident will be covered under the policy usually depends on what caused the damage. Here's how I think about questions based on these situations.

Is there coverage if a pipe bursts?

A homeowner insurance policy will typically cover structural damage caused by "sudden and accidental" events that occur inside the house, like a burst pipe or a broken washing machine. This will likely cover the walls and carpeting. Depending on the amount of personal property coverage in your policy, some damaged belongings may be covered as well. If you're in an apartment building and a water overflow causes damage to someone else's property, your liability insurance will likely cover it.

What if it's damage from flooding during a storm?

Damage from a weather event outside your house is another thing entirely, which I make clear to customers when helping them understand their coverage options.

Homeowners policies in general do not provide coverage for flooding that comes from rising water levels due to a hurricane, rainstorm, melting snow, etc. You can, however, purchase separate flood insurance via the National Flood Insurance Program. Your insurance agent can help you with the purchase.

Only about 12 percent of homeowners have a flood insurance policy according to the Insurance Information Institute. Some mortgage lenders require that you purchase flood insurance if you live in a flood-prone area, but you might want to consider purchasing such a policy regardless of where you live. Floods are the most common national disaster in the U.S., and more than 20 percent of flood claims occur in properties that aren't in a high-risk flood zone, according to the National Flood Insurance Program 

Am I covered if water seeps into my basement from the ground?

Sometimes groundwater gets into a basement through cracks in your foundation or due to inadequate drainage around your house requiring maintenance. Damage typically is not covered in those cases.

You seem like the type of homeowner who knows this already, but regular maintenance and upkeep are also essential to help reduce your chances of needing to file a claim at all. Chores like regularly inspecting your appliances, draining outdoor faucets and knowing where your emergency shut-off valve is located can help keep you on top of emergency situations before they happen.

Given that water-related damage can occur, it's important to make sure that you understand what is and isn't covered under your current policy. If you have questions, or want to learn about available insurance options, a conversation with an agent might be beneficial so you can get the coverage you want.

This article was brought to you courtesy of Farmers Insurance agent, Jonathan Priest with an office at 57 Tandberg Trail, Suite 7, Windham. <

The information contained in this page is provided for general informational purposes only. The information is provided by Farmers® and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to this article or the information, products, services or related graphics, if any, contained in this article for any purpose. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk.

 

Real Estate: Considerations before buying new construction

By Carrie Colby

There are many things to think about when buying new construction, and it can be a daunting prospect. You are making a huge financial commitment that could have a significant effect on your future. There are some truly essential considerations when buying a new construction home.

Setting Your Price
Whatever type of home you are looking to build, you need to set your budget. Do you know how much you can afford to spend? Getting preapproved for a mortgage should make things clearer so that you know your spending limit. If you have realistic expectations of what you can afford, you won’t waste your time on home plans that stretch you too far financially. It isn’t just the mortgage payments you need to consider. There are utility bills, property taxes, maintenance costs, and living expenses, to name just a few. And don’t overlook your moving expenses either.

Picking Your Location
You are likely to have many things that influence your choice of location. Perhaps you want to be near friends or family, maybe your journey to work is an important consideration, or you are looking to live in a certain school district. If you have many competing reasons that pull you in one direction or another, you may need to compromise the location. This could mean buying a new house in an area you know well or making a fresh start in a new neighborhood. If you don’t know the neighborhood you are thinking of moving to, you need to be more careful to make sure it is right for you. Visit the neighborhood at different times of the day and the evening to find out what it’s really like living there.

Do You Buy Land Or Purchase From a Builder?
One of the more significant decisions when buying new construction is whether you buy land and build your own custom home or go with a builder currently constructing homes. Of course, there are pros and cons to each of these choices. When hiring your own builder, you have the ability to construct exactly the way you want things. While some builders offer custom features, not every builder will let you do things exactly the way you want them. The builder you like might not want to build on your land. Some builders shy away from that. Maybe the builder you like only has homes available in a subdivision, and you would prefer a more private setting?

What Size House Do You Need?
If you are buying new construction, you might have more say in the size of rooms and number of bedrooms, but whatever type of home you are buying, you will need to know how much space you require.

Buying New Construction Homes
When buying new construction homes, you can have a lot of influence on how the house turns out. Changes can be made so that the property better fits what you want from a home. There can be downsides to new construction, though. If you aren’t careful, however, the finished product might not meet your expectations. If this is the case, costs could increase if you need to make changes or alterations after the home should have been finished. This scenario can be avoided if you have good communication with your architect and contractor. If your new construction is part of a larger development, you might find you have less say in how things turn out. This could be more of a problem if the home is a townhouse or a unit in a complex.

How Long Do You Want to Live in the Home?
If you intend to live in the home for a very long time, you should probably do more to make sure you build exactly the right home. But if you only anticipate being in the home for a year or two, perhaps you can be more flexible in your choice.

Final Thoughts 
Buying a new house can either be an exciting experience or a real nightmare. If you are working with a builder, it is imperative to do lots of due diligence. Most of the downsides of building a home happens when you go with the wrong building contractor. <

Carrie Colby is a Broker with Allied Real Estate, 909 Roosevelt Trail in Windham. She can be reached at 207-232-5497.

Real Estate: Million Dollar Question, how much is my home worth in this seller’s market?

By Lisa DiBiase

One of the challenges of determining your home’s value is that “value” is subjective; one buyer may be willing to pay more than another. Buyers determine value by comparison shopping. 

They will look at the price of your home based on its features and benefits and compare it with similar homes that have recently sold or are currently on the market. So how do you find that sweet spot, meaning a listing price that will attract buyers and help you reach your goals?

In order to create value in the eyes of the buyer you either need to have a competitive list price or have more features and benefits for the same price! Most homeowners getting ready to sell their home are not looking to add any new features to their property.

Let me be clear, I am talking about adding a new feature, not simply making repairs to bring the property to today's current standard! Every home is going to have a kitchen, bathroom, etc. (at least we hope)!

Here are a few factors that influence the value of a property:

● Square footage of home, property acreage and age

● Location and local market conditions

● Comparable homes that have sold recently

● Economic conditions, including but not limited to interest rate environment

● Renovations and repairs

Realtors have their own techniques for determining a home’s value. The process many realtors use to estimate a home’s value is called a Comparative Market Analysis (CMA). A CMA includes information about comparable homes (also known as “comps”) in your area. The data is typically pulled from the Multiple Listing Service, the Realtors® database of properties in a given area that are listed for sale or have a sale pending.

If done properly, a CMA can tell you what homes similar to yours are selling for, how long it’s taking them to sell, and what homes sold for compared to their original list price.

What to look for in a CMA:

● Size

● Location

● Number of bedrooms/bathrooms

● Style and view

● Home type (e.g. single-family home, condo, townhome, etc.)

● Recent sales price

When a buyer purchases a home, the bank requires them to get an appraisal at some point before underwriting of the loan can be completed. As the seller, you’re not required to get an appraisal prior to listing the property, however it may be a good idea if you don’t want there to be any second-guessing about your home’s value when you’re ready to list.

It’s the appraiser’s job to provide an impartial, thoroughly researched estimate of a home’s value. They do that by visiting the property and reviewing recently sold or pending sale comps.

Appraisers use Fannie Mae’s Uniform Residential Appraisal Report as a guide for conducting an appraisal.

This report is a checklist of things appraisers should look for, such as:

● Where the home is located

● Whether the home is in a FEMA flood zone

● The condition of the utility services and fixtures on the property

● When the home was built

● The type of foundation

● The condition of the attic and basement, heating and air systems, walls, windows and doors

● Additional amenities, such as a pool, deck or fireplace

● Any structural improvements or repairs that have been made

● Whether any additional repairs or improvements are needed

● The condition of any appliances in the home

● Signs of damage that would compromise the structural soundness of the home.

In addition to using this report as a guideline, an appraiser would consider the sales history of the home and the approximate replacement cost to rebuild the home.

According to Opendoor.com: There are three types of home values you need to be familiar with as a seller:

● Appraised value: According to Investopedia, appraised value is a home’s value as determined by a professional appraiser at a given point in time. Appraised value is used by mortgage lenders during the underwriting process to determine how much a buyer can borrow.

●Assessed value: Assessed values are used to determine how much property tax is owed on a home. Assessed value is set by a municipal or county tax assessor, who evaluates the home’s features and those of comparable properties to arrive at a valuation. It’s usually a lower number than fair market value.

●Fair market value: Fair market value refers to how a home is valued when both the buyer and seller are reasonably knowledgeable about the property and neither is under any pressure to buy or sell.

According to Realtor.com, fair market value tends to be the truest measure of a home’s value overall, since it’s based primarily on supply and demand. This information is presented for informational purposes. As I have said before, please call a local REALTOR for all your real estate needs no matter how big or small. We are trained professionals here to make your life easier. It's best to surround yourself with the right team that can continuously give you the right advice for all your circumstances. <

Lisa DiBiase is a Broker/Owner of Landing Real Estate. She and her company represent buyers and sellers in the Greater Portland area. For all your real estate needs contact Lisa at 207-653-0823 or lisa@landinghomesmaine.com

Windham Maine 15th Hottest Zip Code in 2021

By Nicole Foster, Broker/ REALTOR

In August the zip code 04062, which covers the majority of Windham, was ranked by Realtor.com’s Hottest Zip Codes of 2021 as #15 of the nation’s 42,000 zip codes. Rankings were based on sales data from January through June of this year using an algorithm including two factors: market demand as measured by unique viewers per property and the number of days the listing remained active on the site. 

The top 10 zip codes in the report show there is a huge demand for buyers wanting to get further away from densely populated urban areas. Half of the 50 zip codes listed were located in the northeast and all shared similar market conditions with homes selling fast and limited inventory. 

This year in Windham the average number of days on the market for listed homes is only 5 days and the homes on average are selling for over 107 percent of their list price. What this means is the average list price for Windham single family homes this year is up to $349,900 but they then are closing out and selling for closer to an average of $375,000.

The overwhelming majority of the single-family homes purchased in Windham this year have used Conventional financing with only just over 15 percent being cash sales. The number of buyers using government backed loan products such as FHA, VA or Rural Development combined is just over 10 percent. With climbing home prices some prospective buyers may be pushed out once mortgage interest rates reach 3.5 percent on a 30-year fixed mortgage as the economy improves and inflation rises, likely by next spring.  If both home mortgage interest rates continue to creep up while home prices continue to rise we could see less competition next year, but the inventory has remained so tight it could have little impact. 

For years now we have been working around limited inventory, but the pandemic has caused this issue to soar to new heights. So far this year the number of listed, single-family homes in Windham which have sold both below $200,000 and over $900,000 are exactly the same with only 7 homes selling in each of those two contrasting price points (as of 8/23/21). This number would be far greater if our current supply of inventory could meet the growing demand of buyers who are currently shopping for homes. During the pandemic people began to upsize and look for larger homes offering more space. Loan applications for mortgages larger than $766,000 jumped to 55 percent while loan applications in the range of $150,000 - $300,000 fell by 2 percent according to Mortgage Bankers Association.

2021 Windham Single Family Home Sales

Sale Price           Sold

0 - $200,000         7

$201K - $300K  31

$301K - $400K  71

$401K - $500K  42

$501K - $600K  15

$601K - $700K     4

$701K - $800K     3

$801K - $900K     2

$900K - $1million   2

$1M -   $2M           2

Over $2M              1

Land sales across the state have continued to surge as buyers look to face less competition by building their dream home and developers look for ways to create more inventory. Total land sales year over year in Maine has jumped to a staggering increase of 138 percent.  Many are speculating that the best way to meet the rising buyer demand for housing will be to build more homes, which will take some time. Those looking to downsize by purchasing a condominium will need to be prepared to face similar market conditions with possibly even tighter inventory and greater competition with sales increasing two-fold over single family homes so far this year.

If you are a homeowner currently struggling with the logistics of wanting to sell but not knowing where you will go, you are not alone.  We have a growing list of “shadow inventory” of would be sellers who simply cannot find their next place and many are getting creative. This is a unique time for homeowners who want to capitalize on both the leverage and prices they can demand. Sellers might walk away with tens of thousands of dollars more than what they owe on their home by listing right now. These market conditions are creating life changing scenarios for some people, some will be able to retire sooner, pay off their college loans before they had planned or help their families more than they were prepared to. <

Nicole Foster is a real estate broker at Locations Real Estate Group in Falmouth specializing in single family residential new construction since 2006 and a Windham resident.