Massive increases in insurance premiums are busting budgets and derailing some home purchases.

If you’re a property owner, you know you need homeowner’s insurance. And if you live in an area that’s been designated as having a higher risk for property damage – such as in a flood zone, an area of extreme weather, or a densely-wooded location – you might expect that your insurance rates will be higher. And, of course, homeowners know that if they file a claim or two over the years that they should pay more at their next policy renewal.

But many homeowners and would-be buyers are finding out that premiums are rising sharply through no fault of their own, if insurance can be secured at all. What was once a standard, perfunctory item on a homeowner’s to-do list has become a lot more complicated as larger insurance companies try to stem losses caused by an increase in claims in areas affected by major natural disasters like wildfires, flooding, tornadoes, and hurricanes. Those costs are being passed down the line to consumers. 

“It’s problematic for our buyers and problematic for our sellers,” said Jillian Keck Hogan is a top-producing agent who works in DC, Maryland and Virginia and has experienced how acquiring insurance can complicate a home sale. She recently represented a seller for a listing that the buyer couldn’t secure insurance for because there weren’t definitive records about the age of the roof. Multiple roof inspectors gave reports that insurance deemed inadequate because the roof, while in sound condition, was past its half-life expectancy. 

Roofs can last around 30 years and the average life of most roofs is around 20 years. In order to secure their insurance and proceed with closing on time, the seller chose to split the cost of replacing the roof after closing. Jillian said that education for both buyers and sellers is key. She advises that sellers should gather details about the age of their roof, systems, and utilities before bringing their home to market and be prepared for buyers who may request fixes for big ticket items, while buyers should start shopping for insurance sooner rather than later, and to investigate multiple carriers for rates.

“It ends up being messy if you’re trying to get all of your insurance research done only days before closing,” she warned.

Susie Adib, Senior Producer with Commercial Insurance Associates, said there are many factors that are causing a spike in premiums – in many cases more than 20% – including an increase in severe weather and natural disasters, a carrier’s drive for profitability as set by their combined ratio, and complications from pandemic recovery, including inflation, labor shortages. Many things that are just now working through the insurance pipeline, a process that takes time because of regulatory review at the state level for any changes a carrier makes regarding premium increases. State agencies make sure there are sufficient and affordable options for consumers and local departments of insurance and their resources can be found here for DC, Maryland, Virginia and West Virginia.

Adib said that much like credit scores, homeowners will have an insurance score that affects how much a policy will cost. This can include factors like how many claims you’ve made in the past, your credit score, and who you’ve been insured with in the past. For example, there many companies that won’t insure a slate or flat roof, historic properties, or homes built before 1900 and if you’ve had a previous insurance carrier that covered those items in the past, it will be a flag to a new carrier that there is a mitigating factor in the property.

What happens if a property is deemed uninsurable? Adib said there are still options. Again, much like credit companies, there is a market for substandard properties where premiums will be higher but at least the home will be covered. There is also the option to exclude coverage for a portion of the home that is at higher risk, for example a roof or liability for a pet. Lenders can also require force-placed insurance, whereby the lender secures the insurance and passes along the costs to the borrower via steep premiums in their mortgage. 

“When it comes to insurance, there are so many options,” Adib said. “It’s so important to have an actual person you can talk to – not an #800-number – especially when a claim arises.” She advises homeowners to do timely research to make sure you have that person to go to bat for you when the time comes.

Here are some tips for keeping insurance premiums in check.

• Review your insurance policy every couple of years, especially if you’ve made improvements or renovations to the property. Adib said that shopping for new coverage won’t increase your rate and it’s important to understand how different carriers might evaluate your policy and the premiums you pay. “It’s your policy so make sure it covers what you need it to.”
• Don’t make small claims. The average homeowner makes one claim every seven years and anything above that could impact policy rates. For example, don’t file a claim if you have a $500 deductible and a tree falls on your backyard shed accounting for $700 in damages. Yes, you have insurance for a reason but not all claims are equal. The more claims on a policy the more likely it is to face a surcharge or be at risk for non-renewal.
• Shop replacement costs of your home, which are different from the market value of your home which also includes the value of the land the property sits on. Replacement costs are the amount of money needed to repair a property or replace belongings at current building supply costs. Over time, automatic annual increases driven by roll-on percentages that are driven by inflation can increase expected replacement costs that may not be aligned with actual costs. If you’ve had your policy for a while, it’s worth looking at the suggested replacement costs and see how they compare with other policy quotes. It’s important to note that while a carrier’s premium rates are reviewed and regulated by the state, roll-on percentages for replacement costs are not, even though high replacement costs can increase the premium. A home with a current replacement cost of $500,000 with an annual roll-on percentage of 3% is going to have a lower premium over time than a similar home with a roll-on rate of 6%. “You could be paying a lot more in premiums for coverage you might not need,” Adib said.
• A higher deductible can lower insurance rates, especially if you don’t have a lot of claims on the policy. Owners like low deductibles because they want to reduce how much they must pay out-of-pocket for damages to their property, but lower deductibles mean higher premiums, and deductibles only come into play when a claim is made. Over time, having a $2,500 deductible and a lower annual premium will save more money than having a $500 deductible and a higher premium. Another option is a percentage deductible, but Adib cautions that while this can lower premiums it will mean more money out of pocket if there is a claim.
• Maintain your home in good condition. Look for trees around the property that could cause damage, check the roof for missing shingles or areas of leakage or water absorption, keep up with maintenance on big-ticket appliances like the HVAC and hot water heater. Insurance carriers do conduct inspections on properties they cover – including using spatial imaging to evaluate roofs – and your rates could increase if they find something of concern.
• Consider a local carrier. National carriers have increased volatility in their rates because they cover the entire country, including areas that may be prone to natural disasters. To make up for losses in those areas they must be strategic about rates and be selective about the risk they will accept with new policies, while smaller and local carriers may be willing to take on that risk.

If you’re a current homeowner, take a few moments to review your current policy to check you have the coverage you need on terms that work for you now, as circumstances are likely to have changed if you’ve owned that property for a while. If you’re a buyer looking to secure coverage, pay attention to the condition of the property you’re purchasing and be prepared to negotiate with the seller to make fixes or shop around for an affordable policy.

Your trusted McEnearney | Middleburg Real Estate | Atoka Properties Associate can connect you with recommended insurance professionals who can explain options and help you find a policy that fits your needs and a rate that won’t break the bank.

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Here’s what’s not being published: why consumers choose to pay us.

Salacious headlines that imply consumers have been duped into overpaying (the same fee) are wrong. That would assume we’re all the same. Also – wrong. Who you hire matters. I don’t care if it’s your hair or your house. Results vary and will depend on who you hire.

Consumers are smart.

Their decisions are the result of a balanced risk assessment.

Let’s use your lawn as another example. Let’s say a foreign species has taken over and is growing at a ridiculous rate. If consumers want to mow it down, they’ll likely do it themselves. If they want a treatment program that actually eradicates the weed, my bet is that they understand it may take more time, effort, and money.

You’re probably thinking, “Yeah—but those are simple things. Buying or selling real property is different.”

Exactly.

Buying and selling real property isn’t straightforward, simple, or low stakes. To propagate any other idea is misleading and harmful.

Why?

Because they know they shouldn’t do a big thing badly, and they know buying or selling is a big thing. It has real and impactful consequences, and there are nuances to their move.

As with any profession, skills matter.

The average consumer intuitively knows this – and they’re willing to pay the right professional.

The proposed settlement will reinforce what is already the best real estate system in the world and the pros who operate within it. To somehow infer otherwise is shortsighted and doesn’t give the consumer much credit.

If approved, NAR’s settlement would change some operational infrastructure and ensure clear communication and education between realtors and their clients.

This settlement isn’t about paying highly skilled realtors. They’re worth it, and don’t be fooled. Consumers know it.

Sandy McMaster, a licensed real estate agent with McEnearney Associates. For over a decade, Sandy has helped hundreds of people in Alexandria and the DC area successfully navigate the changes and reduce the uncertainty that can easily become overwhelming. This experience allows her to see around corners and anticipate roadblocks. When working with Sandy, it will allow you to move quickly, with confidence and the knowledge that, no matter what happens, she’s got you.

Take a look Sandy’s website for all of her listings available throughout Virginia and Washington, D.C.

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Real estate transactions can be stressful in the best of circumstances. Add in emotionally complicated factors like death, divorce, or bankruptcy and you’re looking at a process filled with potential difficulties.

A home is more than a collection of bricks, wood, concrete, and glass. It’s the center of daily activities where people gather, memories are made, dreams are discussed and communities are built.

But it’s also an important financial asset – often the largest asset a person owns – and there are circumstances where that asset must be divided and sold. If all parties with a stake in the property agree on an outcome, this can usually be managed cleanly and swiftly. But in instances of death, divorce, and bankruptcy, emotional intricacies and family dynamics can complicate matters. Grief, feelings of loss, anger, and confusion can drive people apart when they most need to collaborate.

Keith Barrett, Founder of Vesta Settlements, recently met with several of our Associates in a discussion on the thorny issues that can arise in real estate transactions and offered insight on how agents can help their clients maneuver through a maze of legalese, high emotions, and fiduciary constraints. Here are some things he encouraged sellers to keep in mind when navigating these difficult life events.

Death

The death of a loved one can be a challenging situation, sometimes causing a dramatic effect on the ability of the friends or family members to manage and sell real property owned by the deceased. To understand how the real property can be sold, we must first look back to how the decedent took title to the property at the time of purchase.  

Who has the power to convey title when the owner has died? The easiest situations are when there is more than one seller and they held title (ie: were on the deed) with Right of Survivorship, meaning at the moment of death ownership rights transfer to their survivor through either Tenants by the Entirety (which is available only to married couples) and Joint Tenancy, where two or more parties have equal rights of ownership in a property. In both instances, the surviving spouse or surviving joint tenant(s) need only provide a death certificate to the title company. 

A more complicated situation is Tenants in Common, where multiple owners hold title to the property together, but they each own a designated share of the property without the Right of Survivorship. Upon the passing of one owner, their ownership interest passes per their will; if they don’t have a will, then their ownership interest passes per statute in the state of the property (local examples: Section 64.2-200 of the Code of Virginia, Section 42-16 of the Code of the District of Columbia, Maryland Intestacy Law). To sell the property in these situations, the remaining owner(s) must coordinate with the administrator of the decedent’s estate. If the decedent died testate (with a will), then the executor named in the will must file the will with the probate office of the circuit court for the county in which the property lies. If the decedent died intestate (without a will), then one of the descendants must apply with the probate office of the circuit court for the county in which the property lies to be appointed as the administrator of the estate. Once an administrator or executor has been appointed by the probate office, that person may begin the process of selling the property. However, there are mitigating circumstances that may delay the timeline of a sale, depending on the jurisdiction. 

The best way to ensure there are few issues arising following the death of a homeowner is to have a will that designates an heir or executor to authorize the sale of the property. Another option is to establish a Trust, which creates a private fictional entity (a document) that never “dies” and which exists to hold and own assets and gives people control over those assets and avoid probate. 

Divorce

A divorcing or divorced couple can make a real estate sale stressful for everyone involved. Parties can be angry, vindictive, irrational and uncooperative. When a Realtor® is put into the middle of these relationship dynamics, it’s important that all sides feel heard, respected and empowered in their position. An agent wants both parties to stay focused on the goal of maximizing the proceeds of the sale in order for the sellers to move on to their next respective chapters.

For purposes of real estate, a couple can only be considered either married or divorced. This means that even if a couple is separated, they are still married until the court has entered the final divorce decree and property remains under the current title status (see above for Tenants by the Entirety and Joint Tenancy). However, if the divorcing couple has already agreed to a Property Settlement Agreement outlining how the property will be dispensed, it’s important to share that with an agent because the sale of a property can occur before the divorce decree is finalized. 

Parties need to determine how the proceeds are to be divided prior to settlement and if the parties cannot decide on how the proceeds are to be divided, then they must decide where the proceeds should be held (typically, one the divorce attorneys can hold the funds).

Bankruptcy  

Bankruptcy is a form of federal financial protection that is unfortunately often viewed through the lens of shame, embarrassment, and mistrust. There are many reasons a seller can be in dire need of financial relief and it can be one of the most anxiety-producing experiences a person will go through. 

When a petition for bankruptcy is filed, it triggers an Automatic Stay by the bankruptcy court which protects the debtor from their creditors. However, once in bankruptcy, the debtor is also restricted in how they manage and sell assets, including their home. Here are three ways in which a debtor in bankruptcy can sell their home. 

1. A seller could obtain a discharge from bankruptcy, which means that they have completed or are on the way to completing the bankruptcy process and the bankruptcy court has closed their case. At that point, they are no longer under the restrictions of the bankruptcy court, and they can sell their property without needing to ask permission. Of course, this also removes the Automatic Stay so creditors can resume trying to collect on the debt. 
2. They could ask the bankruptcy trustee to abandon the property and move it outside of the bankruptcy. Once the property is no longer a part of the bankruptcy, the debtor can sell the property without needing to have the sale terms approved. A note of caution: When the property is abandoned by the trustee and is outside of the bankruptcy, it is once again subject to creditors, and the bank could restart the foreclosure process if the debtors fall behind on payments.  
3. They could file a motion requesting that the bankruptcy court approve their sale of the property. Under this option, the seller would list the property and ratify a contract subject to third-party approval. The settlement date must take into account the length of time to get the motion heard by the bankruptcy court and for the appeal timeframe to have expired.

A professional Realtor® is your best advocate in these types of transactions, trained with the knowledge to guide clients through the process and ready to provide resources for areas outside their scope of expertise. Keep in mind that an agent cannot offer advice outside their realm of expertise but they can recommend legal professionals to assist in transactions where title transfer may become an issue. Let an experienced McEnearney | Middleburg Real Estate | Atoka Properties Associate be your advocate and supportive guide through any major life event you face. Because it’s not about us… it’s about you.

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If you were to watch an episode of Million Dollar Listing or any of the many other real estate shows you might think you have an idea of what a real estate agent actually does on a day-to-day basis: they spend their days looking at gorgeous properties while driving around town in a fancy car and cashing large commission checks. 

As with many things in life, what you see on TV is seldom an accurate representation of reality. Unless you have recently bought or sold a home, you likely have very little idea about everything that real estate professionals do to serve their clients. So, let’s take a look at just a few of the things an agent must do to be a successful local expert:

Market Knowledge – You’ve probably been at a party or an event, found yourself talking to a real estate agent, and asked them, “How’s the market?” Being able to answer this question accurately, clearly, and with relevant market data is something every agent is expected to do. They have to stay up-to-date with market activity, statistics, trends in pricing, and how one segment of the market differs from another. Our clients rely on us to advise them on pricing and it’s our responsibility to deliver. 

Contracts – The DC Metro real estate market differs from many other parts of the country, and in our region, your agent is responsible for drafting and negotiating contracts on behalf of clients. These are legally binding documents so your agent is always working to understand every word of the contract, some of which can be up to 70 pages! 

Marketing and Advertising – In addition to marketing properties, successful agents put together a comprehensive communication and outreach plan to stay in touch with clients and network with other agents. That can involve client events, mailings, market reports, and much more. 

Business Development – Agents are the CEOs of their own start-up companies and they must have the right strategies in place to be successful. Much like marketing and advertising, most agents will have a business development plan in place to generate more leads and grow their business. 

Social Media Manager – Real estate agents are just like most other businesses in that having a presence on social media and keeping up with ever-evolving trends is imperative.

Financing – Because agents work closely with loan officers throughout the buying process, they must have a strong understanding of myriad financing and loan programs to accurately advise their clients. 

Multiple Jurisdictions – Whether your agent is working in Virginia, Maryland, Washington, DC, West Virginia, or any other state, they must know the difference between them as it pertains to things like tax rates, building restrictions, and much more. 

Costs – It’s an absolute requirement that your agent knows the costs their clients will incur during the purchase or sale of their home. These include things like transfer and recordation taxes, settlement fees, lending fees, home inspection costs, and many more. 

Community Knowledge – A good agent stays continually informed on what’s happening in the communities where they work, including development projects, transportation initiatives, changes to local schools, businesses that might be coming to or leaving the area, and any number of factors that could impact property value. 

Continuing Education – Agents are constantly learning. In addition to continuing education required by every jurisdiction to maintain a license, agents attend national, state, and local seminars and conferences, participate in weekly or monthly brokerage business meetings, and serve on association committees to gain the knowledge that helps them better serve their clients. That’s in addition to the daily industry news they keep up.

These are a few of the many areas where a good real estate agent is a market expert, but this does not include other things an agent does daily like being a therapist, couples counselor, furniture mover, house cleaner, landscaper, babysitter, florist, stager, window washer, trash hauler and so much more. 

We love what we do and we work hard to represent our clients’ best interests but it’s not always as glamorous as it’s portrayed on TV. 

Andy Hill is Executive Vice President and Managing Broker for the Washington, DC and Maryland offices of McEnearney Associates.

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How young is too young to be a homeowner? For the minor children of a top-producing Realtor®, you can’t start soon enough.

Cher Castillo began building her real estate savvy when she was an undergrad at the University of Florida in the late 1990s and found a condo she thought was a great buy at only $40,000. But she needed the help of her mother, who was not enthusiastic about the purchase and passed. 

By the time Cher graduated, that little condo had increased in value to $200,000 and she knew her instincts had been correct. She also knew that one day when she had a family of her own she would encourage them to take the leap into homeownership as soon as possible.

That’s how her sons Cruz and Lincoln both became property owners at age 4.

But before sharing her wisdom with her children, Cher first had to build her own knowledge base. She was finally able to buy her first home after graduating and moving to the DC area at age 22 for a job on Capitol Hill. She beat out 15 other offers and paid $150,000 for a Victorian row home in Eckington that was in need of renovations, which she did herself room by room. 

Along the way, she discovered a love for the property development process and making an income in real estate. She sold the home 2 years later for $450,000 and after purchasing two more properties, she opened her own brokerage at 26.

Fast-forward to the present and Cher’s family includes a blended family of six children, all of whom have an interest in real estate. But it’s the youngest who have – quite literally – become the poster children for building generational wealth through real estate.

Cruz, now 14, became an owner at age 4 with the purchase of a property in Baltimore for the nominal amount of $2,500 (which Cher had negotiated down from $10,000) and without yet doing any improvements have already increased in value to $125,000. 

She asked Cruz, now that he owned a property, what he planned to do with it. He answered, “Renting! That way I get money every month rather than selling it and just get money once.” His ability to conceptually understand the complexities of buying and holding real estate impressed Cher, but Cruz took it in stride. “I listen to you all the time in the car, Mom,” he told her.

Not long after the Baltimore purchase, at age 8 he became the face of Cruz Condominiums, a development with three luxury condos in North East DC. “He really got a turn-key experience in terms of developing and selling with this project,” Cher recalls. Cruz accompanied his mom on project development meetings, renovation tours, and open houses, and was featured in all the property marketing. Cher says that he has a large poster of himself and the condos on his wall at home and is proud to show it off to his friends, who are also curious about real estate.

“We lived on the same block that the condos were being built and kids would come by and ask questions,” Cher says. “They would see my name on the sign and wonder what that meant, and I was able to explain how real estate worked.”

Lincoln followed his big brother and bought his first property in Baltimore City as well and went through the purchase process just like any other buyer, complete with a settlement meeting arranged by an attorney friend of the family.

Obviously, the purchase of real estate property by a minor requires responsible adults to navigate the process, but the homes are indeed in the childrens’ name through an LLC that is connected to a trust that the boys will have access to at age 21. “IF they behave themselves,” Cher jokes. She advises that parents or guardians who want to purchase properties in their kiddos’ names should first consult an attorney and an accountant to ensure legal and financial logistics are buttoned up.

Cher also advises having a trusted Realtor® guide the property search and dig for information about what areas are ripe for investment. “Don’t just buy because it’s cheap,” she cautions. “Is it in an area where development is happening? Is there growth potential? Approach it with an investment mindset.”

She also encourages parents and guardians to involve and educate their children throughout the home

-buying process. “If you are going to do this, walk your kids through it from A to Z so they understand all the parts of the transaction,” she says. “Helping them understand the journey is the part that will make them fall in love with the process.”

To that end, Cher is developing a non-profit she calls Young Moguls, aimed at helping 4-17-year-olds learn how to build a real estate portfolio and generate wealth and equity at a young age. 

The most important thing that Cher wants children and the adults who are guiding them to do is not to wait to buy real estate. “If you show them the possibilities of home ownership as early as possible, they won’t be afraid of it in the future.

Cher Castillo & Family

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