When selling a home to first-time buyers, you have a number of hurdles to jump through. On the one hand, your most important job is to convince them that you have chosen the best possible home for them. You need to walk them through every single feature and show them how it will impact their quality of life.
On the other hand, you also have to answer their questions about homeownership itself. As brand new homeowners, they rightfully have many questions about what it takes to keep a home in good order. We all know it is not as easy as paying your mortgage and living happily ever after, but being able to provide personalised answers to each question is a skill in and of itself.
Here are some of the most common questions you will be asked, along with how to answer them.
How much homeowners insurance do I need?
This is a very common question that is, nonetheless, difficult to answer. This is not only because every home is different and you have to take a number of factors into consideration. It is also because different homeowners have different expectations of homeowners insurance.
Letâ€™s start with the basics. Homeowners insurance needs to cover:
- the cost of rebuilding the home
- the cost of replacing the possessions inside the home
- the cost of alternative living arrangements while the home is rebuilt
- personal liability cover for if someone else incurs damages on your property
The cost of rebuilding the home is not easy to calculate. There are a number of things to take into consideration, including the cost of materials, the expense of recreating certain features (such as ceiling moldings and carvings), and the price of labor.
Many insurance companies will cover up to the value of your mortgage, but since that includes the price of the property itself, you may not want to price yourself that high. However, if due to a natural disaster that destroyed your home (and others around it) the price of materials goes up, the basic replacement cost may no longer be enough.
For these scenarios, you can add extended replacement cost. Extended replacement cost adds 25-50% of the coverage limit to rebuild your home.
Most new homeowners do not consider the cost of their possessions all that high. After all, they are just starting out. However, if you take into account the cost of replacing all their clothes, furniture, decor, linen, and so on, it adds up to a lot of money.
The basic cover provided by most insurance companies for possessions should be enough for most homeowners. Particularly expensive items like jewelry and high-end electronics need to be added individually.
The cost of living arrangements will depend on the size of your family and your standard of living. Insurance companies will price according to the value of your home.
Everyone needs personal liability cover, as accidents happen. With the cost of health care so high, your insurance needs to be able to pay thousands of dollars in damages.
What do I budget for maintenance?
Another common new homeowner concern is how much to budget for maintenance. Any experienced realtor knows that maintenance is a constant requirement even in the newest homes.
The standard answer given is to budget 1% of the value of the home every year. However, older homes may require more.
What do electricity and water cost?
The cost of electricity and water is a common concern. Of course, there is no standard answer. However, you can get fairly close simply by asking the seller to share their old accounts.
Go through an account with the new homeowner. Show them, item by item, how to calculate what they need to pay and how to pay it. Depending on the area, there will be items like sewerage availability charges and other specific fees that they have not anticipated. They will have questions about why they need to pay these fees.
In all likelihood, they are not going to be paying much more or much less than the previous owner did. By asking the seller for those old accounts, you can provide accurate information without having to jump through hoops to get it.
Do I need to pay for security?
Break-ins are common in the United States. Every home needs a security system. However, the cost of the security system will vary greatly depending on the size of the home, the prevalence of crime in the area, and the standard of technology the new homeowner expects.
This is another instance in which the seller can help you. They have been securing their home for years and know the ins-and-outs of the security issues in the area. If they already have a security system installed, they may be willing to include it in the sale of the home.
Be ready to provide new homeowners with the answers to all these questions. They will feel more assured of their ability to take care of a new home with all the information at hand.