SF Chronicle interviews Abio Properties broker Cameron Platt on CA Insurance Crisis
SF Chronicle interviews Abio Properties broker Cameron Platt on CA Insurance Crisis
The San Francisco Chronicle recently interviewed Abio Properties broker Cameron Platt for an article about California’s home insurance crisis.
As noted in the article, California’s worsening insurance crisis has found home sellers forced to consider buyers’ ability to find satisfactory hazard insurance as part of the terms of the purchase contract. To address this issue, the California Association of REALTORS, the state’s 200,000-member industry trade association, added a discrete insurance contingency to its standard purchase agreement this summer.
The exact terms of the insurance contingency are generally negotiable, says Platt, but by default, whether the cost of insuring the home is “acceptable” is entirely up to the buyer. If the buyer can’t find insurance within a certain time period — typically 17 days — they have the option to cancel the contract without penalty. Without this contingency in place, a buyer would face the possibility of forfeiting their earnest money, a safety deposit of up to 3% of the purchase price.
“It turns out to be a very powerful contingency, because there’s no real reasonableness requirement,” Platt added. “It’s not up for debate.”
A well-prepared seller should try to collect accurate home insurance quotes to provide buyers with enough information to make a confident decision, Platt said. But even those estimates aren’t guarantees that the buyers will be able to find insurance for the same price.
Platt acknowledged that insurance is still very challenging for buyers to secure, though that hasn’t stopped homes from changing hands. “I don’t think the situation has gotten better,” he concluded. “I just think we’ve gotten used to it.”