Buying & Insuring Old Homes in Bonita Springs Florida
You’re searching for a home to purchase in Bonita Springs Florida and you see it … the most charming, funky little vintage cottage you ever did see. Your heart skips a beat and then you proclaim, “This is the one!”.
These age homes are often found in Heitmans, Rosemary Park, Imperial Shores and older gulf access homes in Bonita Farms.
We know old houses and the challenges of upgrading the systems, insuring them and getting them to the closing table. It’s quite an ordeal and it’s not for the faint of heart.
We, the real estate agents, don’t mean to be a dream stomper but there are some strings attached to purchasing an older home and they’re expensive. You would never even imagine the financial impact that some of them would have and a good portion of it would be insurance related. Here’s the quick and dirty on buying a vintage home in Bonita Springs, Florida so you can make an informed decision.
1. Four point inspections are required on most homes older than twenty years. It’s how insurance companies gauge their risk and qualify the home for insurance and it’s insurance rates. That’s also how if can tell a home has old, recalled or dangerous systems.
2. The most affordable homes in Bonita Springs are generally the older homes and that is the first pitfall for entry level buyers and first time buyers hoping to use FHA financing or VA financing. They have defects that preclude them from qualifying for those specific loan programs.
3. The homes were build long ago at a lower flood elevation and now significant flood insurance fees are required. Being in a flood zone doesn’t necessarily guarantee a home will flood all flood zones are not equal. Depending upon the rating the flood policy could be thousands of dollars per year. If a buyer is barely qualifying for a mortgage the flood insurance costs can put them over the debt to income ratio and then they no longer qualify for the loan.
4. Electrical systems in very old homes may be comprised of cloth wiring, glass fuses or recalled electrical boxes. All of which are costly fixes. If there is a mortgage involved in a home being purchased which has one of these items it may not be insurable so no insurance equals no loan approval. Unless the seller agreed to bring the system to code at their own expense its problematic.
5. Plumbing systems in older homes may be cast drains and insurance companies do not like those rendering homes with that type of system uninsurable. Again, it can be corrected but it is costly remediation.
6. Asphalt shingle roofs have a “shelf life” even if they’re water tight and there are no leaks. Many homes owners in Bonita Springs get a letter from their insurance broker when a home is close to twenty years old, letting them know that unless they get a new roof their insurance will be cancelled. That means a roof that is “up their in years” is close to cancellation so if you purchase the home you’ll also be putting a roof on it in the very near future. It’s a significant expense.
7. Lloyds policy – if you do get insurance and you’re barely getting insurance and either let your insurance lapse or get cancelled your lender will get a policy for you and it’s the most expensive insurance you’ll ever purchase.
8. Inspections start adding up in older homes. In addition to the general home inspection the insurance company will require the four point inspection and likely a wind mitigation inspection which also determines wind risk and window protection during hurricanes. Most older homes have no window protection which may cause higher rates, as well.
9. The fifty percent rule in Bonita Springs is a little known complication that can pop up on homes that suffer catastrophic damage or homes that need a lot of systems updates. It’s complicated but basically in older homes you’re only allowed to improve fifty percent of the structure value. I could write a thesis on it. Call directly if you’d like to learn more about the 50% rule before you buy a home in Bonita Springs.
There are other things that will pop up during the research and inspection period, also. The long story short is that it is the listing agents responsibility to acquire a lot of this information and have it available for buyers but the majority of the time they just don’t do it. Not all real estate licensees are the same. That's why you need an experienced buyers agent to guide you through the process. Experience pays dividends! Think of how much time and money it would save everyone involved if elevation certificates, four point inspections, wind mitigation reports, current insurance policy binder coverage sheets were provided in the supplements of the MLS.