House insurance is becoming a much more significant factor for both buyers and sellers. 

Buyers are often surprised when the insurance company starts asking probing questions right before closing. Particularly when their “new” house is more than 25 years old, currently anything built before the year 2000.

(Also, did you know there are hockey players are playing in the NHL who were born in 2005?)

Sellers may be completely unaware of potential issues. But that’s just because if you renew your policy every year, the insurance company doesn’t care. But when there’s a new owner, it’s a whole new ball game.

Here are some examples:

Poly-B plumbing – the grey stuff. If you’ve got it, you’ve got a potential problem. Not just because it’s a known issue (surprise – it leaks), but because it’s GOING to be an issue when you sell your house. It’s practically impossible to get insurance for a home with Poly-B. The leaking isn’t even the problem. It’s getting insurance! In fact, I don’t know of a policy that doesn’t demand that the insuree replace the Poly-B within 30-60 days of possession. That’s if you can get insurance at all.

Aluminum wiring – This is actually an easy fix. An electrician can pig-tail all your connections for a relatively low cost. (It’s still labour-intensive, so it could cost $2K-$3K.)

Old furnaces and hot water tanks. Many insurance companies will only provide insurance once they’re replaced. This one is new to me, too.

There’s LOTS of other stuff! Some of it may seem stupid, but the fact is that insurance companies are just mitigating their risks.

Many experts believe that the Poly-B issue is way overblown. And they might be right. But try telling that to the insurance company. It’s just easier for them to say, “We will not insure a house with Ploy-B. Period. End of discussion.”

My advice to sellers:

Take care of these issues BEFORE you list. It might cost you $5K-$10K to replace all the Poly-B (including drywall repairs). But that’s most likely a profitable investment. You could get an additional $20K-$30K for your house. Or more!

Here’s the argument I always hear: “The market is hot, so I won’t have to spend that money. The buyer can take care of it, and I’ll sell the house anyway!”

That may or may not be true. Sure, if the buyer is desperate enough, you could sell the house anyway. But you’re going to get WAY less money! Even with multiple offers, it could be the difference between getting 2-3 offers or 10 offers.

Ted Tip #147: The more offers you get, the higher the price. And the price goes up exponentially.

My advice to buyers:

Try to include a home inspection condition in your offer. If the market necessitates writing an offer with no conditions, it’s a calculated risk. But at least make sure you know what you’re buying. Work with an experienced, skilled agent who can explain all the potential hazards. (I only covered a few in this post.)

One question I get asked a lot: Isn’t the seller required to disclose if they’re aware of one of these issues? No. Only if it’s been a problem in the past. For example, if the Poly B burst and caused a giant flood.

One more bit of advice:

Never ever hire a company that claims to “specialize” in a particular sub-service. These companies always charge the most, and the bill is often outrageous. Instead, if you’re a past or future client, call me! I’ve got a Rolodex full of the best and most reasonable tradespeople. 

Call me any time if you’d like to learn more about this topic.

Ted