Problems with homeowners insurance for a REO needing work

3 Replies

I'm in the process of buying a REO. I need to put in a kitchen, bathroom, floors etc. Sonit does need some work. Problem is I can't get regular homeowners insurance according to my agent. The ins company won't write a policy for the property in the condition it is in. What are my options? The agent mentioned an $800 six month special policy but is it really necessary? Regular homeowners insurance costs that much for a year! What are my options? Did you ever encounter a problem like that with one of your deals?

yes, we normally get a Builders Risk policy, about $100/mo.  You obviously won't be living in the property right away, so it will be vacant which raises the risk to the insurance co.

@Wayne Brooks

@Jake Recz

Hi-

=Wayne=

Can this policy be written by any insurance company?

I recently asked about getting a policy on a house that is "not" being sold as is and the seller is not making the changes to the electrical (1 quote is $3700) to bring it up to code. In my due diligence, I found that the electrical is not to code and would not be able to the typical insurance unit it is.

So, this falls on the buyer, which will have to have insurance at closing. Much like Jake, my insurance company (Allstate) said they couldn't insure but had 2 other companies that would (I didn't call or ask for $$$) - until the electrical is bought up to code then Allstate would / could insure it.

Thanks

Homeowners is only for owner occupied dwellings.  That is the first condition, so if that condition is not met, there can be a problem with underwriting and claims.  Now, $800 might be a bit much.  But I don't have any of the info.  Normally a builders risk policy for a normal type rental would not be that much, but this may be bigger, more expensive, etc.

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