Each month, we publish a series of articles of interest to homeowners -- money-saving tips, household safety checklists, home improvement advice, real estate insider secrets, etc. Whether you currently are in the market for a new home, or not, we hope that this information is of value to you. Please feel free to pass these articles on to your family and friends.
Before Disaster Strikes
Fires . . . hurricanes. . . floods . .
. earthquakes . . . tornadoes.... Natural or other disasters can
strike suddenly, at any time, and anywhere. Your first
priority, of course, would be to protect your family and your
property. But it's also important to protect against the
financial consequences of a disaster. A disaster can
damage or destroy your property, force you to temporarily live
somewhere else, cut the flow of wages and other income, or ruin
valuable financial records.
Listed here are some simple, common sense steps you can take
now. Before you take any actions, however, you should be
sure you have involved your family or friends whenever possible
in decision making and planning. You also may want the
assistance of an advisor, such as a Certified Financial Planner,
insurance agent, or similar financial professional. The
important thing is to begin planning now, before the unexpected
becomes a harsh reality.
Fires . . . hurricanes. . . floods . . .
earthquakes . . . tornadoes.... Natural or other disasters can strike
suddenly, at any time, and anywhere. Your first priority, of course, would
be to protect your family and your property. But it's also important
to protect against the financial consequences of a disaster. A
disaster can damage or destroy your property, force you to temporarily
live somewhere else, cut the flow of wages and other income, or ruin
valuable financial records.
Listed here are some simple, common sense
steps you can take now. Before you take any actions, however, you
should be sure you have involved your family or friends whenever possible
in decision making and planning. You also may want the assistance of
an advisor, such as a Certified Financial Planner, insurance agent, or
similar financial professional.
The important thing is to begin planning now,
before the unexpected becomes a harsh reality.
Protect your property
One of the first things to do is find out what
disasters could strike where you live----fire, flood, earthquake,
hurricane, or tornado, for example. The following steps can help you
avoid or reduce substantially the potential physical destruction to your
property if you were to be hit with a disaster. These steps can
reduce your insurance costs, too. For example, you could:
- Install smoke detectors to warn of an
apartment or home fire.
- Elevate utilities to upper floor or attic.
- Clear surrounding bush to protect your home
- Anchor your house to the foundation, and
anchor the roof to the main frame.
- Secure objects that could fall and cause
damage in an earthquake, such as a bookcase or hot water heater.
- Install hurricane shutters on windows, and
prepare plywood covers for glass doors.
- Cover windows, turn off utilities, or move
possessions to a safer location if you have adequate warning of
something like a hurricane or flood.
- If your home is in a high risk flood area,
on a fault line, or threatened by coastal erosion, consider relocating.
- Have your house inspected by a building
inspector or architect to find out what structural improvements could
prevent or reduce major damage from disasters.
- If you haven't yet bought a house, you
might take construction type into account. Frame houses tend to
withstand some disasters, while brick homes hold up better in others.
If you're not sure where to start, you could
contact your local fire department. Fire departments will often make
house calls to evaluate your property and make suggestions on how to
improve safety. In earthquake-prone areas, the local utility can be
called upon to come to your location and show you how and where to shut
off gas lines or how to elevate utilities to get them above a possible
Conduct a household inventory
Inventory your household possessions by making
a list of everything you own. If disaster strikes, this list could:
- Help you prove the value of what you owned
if those possessions are damaged or destroyed.
- Make it more likely you'll receive a fast,
fair payment from your insurance company for your losses.
- Provide documentation for tax deductions
you claim for your losses.
To conduct a thorough home inventory:
- Record the location of the originals of all
important financial and family documents, such as birth and marriage
certificates, wills, deeds, tax returns, insurance policies, and stock
and bond certificates. Keep the originals in a safe place and
store copies elsewhere. You'll need accessible records for tax and
- Make a visual or written record of your
possessions. If you don't own a camera or videotaping equipment
(and can't borrow or rent it), buy an inventory booklet and fill it out,
or make a simple list on notebook paper. Ask your insurance agent
if he or she can provide one.
- Go from room to room. Describe each
item, when you bought it, and how much it cost. If you're
photographing or videotaping, have someone open closet doors and hold up
- Record model and serial numbers.
- Include less expensive items, such as bath
towels and clothes. Their costs add up if you have to replace
- Be sure you include items in your attic,
basement, and garage.
- Note the quality of building materials,
particularly for such furnishings as oak doors or expensive plumbing
- Photograph the exterior of your home.
Include the landscaping---that big tree in the front yard may not be
insurable, but it does increase the value of your property for tax
purposes. Make special note of any improvements, such as a patio,
fencing, or outbuildings.
- Photograph cars, boats, and recreational
- Make copies of receipts and cancelled
checks for more valuable items.
- Get professional appraisals of jewelry,
collectibles, artwork, or other items that are difficult to value.
Update the appraisals every two to three years.
- Update your inventory list annually.
Sound like too much work? Computer software
programs designed for such purposes can make the task much easier.
These programs are readily available in local computer stores.
Most important, once you have completed your
inventory, leave a copy with relatives or friends, or in a safe deposit
box. Don't leave your only copy at home, where it might be
Even with adequate time to prepare for a
disaster, you still may suffer significant, unavoidable damage to your
property. That's when insurance for renters or homeowners can be a big
help. Yet, many people affected by recent disasters have been
underinsured-or worse-not insured at all. Homeowners insurance
doesn't cover floods and some other major disasters. Make sure you
buy the insurance you need to protect against the perils you face.
If you own a home:
- Buy, at a minimum, full replacement or
replacement cost coverage. This means the structure can be
replaced up to the limits specified in the policy.
- Investigate buying a guaranteed replacement
cost policy. When and where available, these policies can pay to
rebuild your house, including improvements, at today's prices,
regardless of the limits of the policy.
- Have your home periodically reappraised to
be sure the policy reflects the real replacement cost.
- Update the policy to include any home
improvements, such as basement refinishing. Annual automatic
increases may not be enough to cover these.
- Buy a policy that covers the replacement
cost of your possessions. Standard coverage only pays for the
actual cash value (replacement cost discounted for age or use).
- Be very clear about what the policy will
and will not cover, and how the deductibles work (the part you pay
before the policy pays).
- Check government operated insurance pools
if you find it difficult to obtain private coverage because of a recent
disaster. Premiums often run higher than market rates, but this is
better than no coverage.
- Use your home inventory list to check that
your policy's coverage matches the value of your possessions.
If you rent:
- If you are renting, consider locating
outside a high risk flood area or away from a fault line.
- Buy renter's insurance, which pays for
damaged, destroyed, or stolen personal property. Your landlord's
insurance won't cover damage to or loss of your possessions. Also,
consider special coverage like flood insurance for your belongings.
- Be clear about what a policy will cover.
Some policies cover more than others. For example, will the policy
pay for living expenses if you have to live somewhere else temporarily,
or for damage from sewer backup?
- Comparison shop for the best coverage at
the best price. Other than government flood insurance, policies
vary from company to company. Policies in most areas are very
affordable. Start with the company that insures your car.
Discounts are often available if you carry more than one policy with a
If you are moving:
- Select a home in an area not on a fault
line, in a flood area, or at risk from coastal erosion.
Consider special coverage
Insurance for renters and homeowners won't
cover certain types of losses. Ask your insurance agent or financial
planner about special or additional coverage for the following:
- Floods- Homeowner policies don't cover
damage from flooding. Call your current insurance company or agent
first about getting coverage.
- Earthquakes- Premiums typically are high,
and deductibles may range from 5% to 20% of the policy's coverage.
Still, such coverage may be better than no coverage. (Earthquake
coverage for the contents of a home usually is separate.)
- Home offices- Some policies automatically
extend coverage to computer equipment and a few other items of business
property. Talk to your agent to determine what items would or would not
be covered. If necessary, you could buy additional business
coverage at a modest cost. Or it may be better to buy a separate
small business policy, which would also provide more coverage.
- Building codes- Ask your agent about
additional insurance to cover the costs of meeting new, stricter
building codes. Frequently, after a disaster people get shocked
with rebuilding costs that are much higher because building codes have
changed. All current codes must be met when rebuilding.
Consider additional structural improvements that provide more
- Other potential problems- This would
include problems such as underground mines (located beneath your
property) sewer backup, or mudslides.
- Big-ticket items- Purchase additional
coverage for specific jewelry, collectibles, artwork, furs, or other
Where to keep cash
After a disaster, you may need cash for the
first few days, or even several weeks. Income may stop if you can't
work. To help stay solvent, consider the following:
- Keep a small amount of cash or traveler's
checks at home in a place where you can get at it quickly in case of a
sudden evacuation. A disaster can shut down local ATMs and banks.
The money should be in small denominations for easier use.
- Set aside money in an emergency fund.
That can be tough to do on a tight budget, but it can be well worth the
effort. The fund can be very helpful, not only in a disaster, but
in other financial crises, such as during unemployment or when
unexpected expenses like legal fees arise.
- Keep your emergency funds in a safe, easily
accessible account, such as a passbook savings account or a money market
- Keep some funds outside the local area,
since the disaster that affects you could also affect your local
financial institutions. A mutual fund money market account in
another city is one option to consider.
- Keep your credit cards paid off. You may
have to draw on them to tide you over.
Use an evacuation box
Buy a lockable, durable "evacuation box" to
grab in the event of an emergency. Even a cardboard box would do.
Put important papers into the box in sealed, waterproof plastic bags.
Store the box in your home where you can get to it easily. Keep this
box with you at all times, don't leave it in your unattended car.
The box should be large enough to carry:
- A small amount of traveler's checks or cash
and a few rolls of quarters.
- Negatives for irreplaceable personal
photographs, protected in plastic sleeves.
- A list of emergency contacts that includes
doctors, financial advisors, clergy, reputable repair contractors, and
family members who live outside your area.
- Copies of important prescriptions for
medicines and eyeglasses, and copies of children's immunization records.
- Health, dental, or prescription insurance
cards or information.
- Copies of your auto, flood, renter's, or
homeowners insurance policies (or at least policy numbers) and a list of
insurance company telephone numbers.
- Copies of other important financial and
family records (or at least a list of their locations). These
would include deeds, titles, wills, a letter of instructions, birth and
marriage certificates, passports, relevant employee benefits documents,
the first two pages of the previous year's income tax returns, etc.
Originals, other than wills, should be kept in a safe deposit box or at
- Backups of computerized financial records.
- A list of bank account, loan, credit card,
driver's license, investment account (brokerage and mutual funds), and
Social Security numbers.
- Safe deposit box key.
Rent a safe deposit box
Safe deposit boxes are invaluable for
protecting originals of important papers. If you don't have a safe deposit
box, keep copies in your evacuation box or with family or friends.
Original documents to store in a safe deposit box include:
- Deeds, titles, and other ownership records
for your home, autos, RVs, boats, etc.
- Birth certificates and naturalization
- Marriage license/divorce papers and child
- Passports and military/veteran papers.
- Appraisals of expensive jewelry and
- Certificates for stocks, bonds, and other
- Trust agreements.
- Living wills, powers of attorney, and
health care powers of attorney.
- Insurance policies (copies are sufficient).
- Home improvement records.
- Household inventory documentation.
Generally, originals of wills should not be
kept in a safe deposit box since the box may be sealed temporarily after
death. Keep originals of wills with your local registrar of wills or
Deciding on a safe and convenient location is
an issue. You may want to consider renting a safe deposit box in a
bank far enough away from your home so it is not likely to be affected by
the same disaster that strikes your home (for instance, bank vaults have
been flooded). Keep the key to the safe deposit box in your evacuation
Home safes and fire boxes
Safes and fire boxes can be convenient places
to store important papers. However, some disasters, such as
hurricanes, floods, or tornadoes, could destroy your home. Usually,
it's better to store original papers in a safe deposit box or at another
location well away from your home.
If you have time...
Some disasters, such as tornadoes or
earthquakes, strike with little or no warning. Others, such as
floods or hurricanes, may allow some time to prepare. If there is
enough time, you could take the following actions:
- Decide what household items you would put
on a very short priority list. For example, imagine you could take
only one suitcase or pack a single carload. What would you take?
Involve the whole family in this discussion. Take jewelry and
other small valuables.
- Take irreplaceable heirlooms, mementos, and
- Don't bother with replaceable items such as
televisions, furniture, computers, and clothing (except what you need to
wear for a few days).
- Be sure, however, to take a battery-powered
radio and spare batteries so you can stay informed.
- Take important papers and computer disks if
you have a home business.
Whew! These are a lot of ideas. You may
not be able to do everything that is suggested---that's OK. Do what
you can. Taking even limited action now will go a long way toward
preparing you financially before a disaster strikes.
Why It Is So Important That Your Home Is Correctly Priced and
"...you need to beware of agents who set the
list price on homes at unrealistically high levels simply to get
While many agents may promise to sell your home for the money
you want, the reality of the real estate market today is that this simply
doesn't always happen. The fact of the matter is, the majority of homes sell for
a price which falls short of what sellers may have been lead to believe.
There are two factors at play here. On the one hand, you need to
beware of agents who set the list price on homes at unrealistically high
levels simply to get listings. This is really unfair because it can set
homeowners up for disappointment and failure.
On the other hand, you have homes that are priced correctly, but
are marketed ineffectively. Without a proper marketing program in place to
ensure a home is exposed to the highest number of qualified buyers, many
homesellers feel forced to accept a lower offer.
There's nothing worse to a homeseller than to have their home
sit unsold for many months because of improper pricing and/or marketing
techniques. Needless to say, either of these situations is highly frustrating to
any homeseller. But more than that, it can be financially crushing if you're
counting on the full proceeds of the sale of your home to fulfill some other
To prevent this scenario when selling your home here are some
points to consider before choosing the agent you want to represent you.
Deciding Upon an Agent
A good agent knows the market and has information on past sales,
current listings, a marketing plan, and will provide their background and
references. Evaluate each candidate carefully on the basis of their experience
Are they pricing your home correctly?
Home prices are determined by the marketplace not by your
emotional attachment or by what you feel your home is worth. You should work
closely with an agent who will suggest establishing a realistic price for your
home. They will help you to objectively compare the price, features and
condition of all similar homes in both your neighborhood and other similar ones
which have sold in recent months. It is also important to be familiar with the
terms of each potential sale. Terms are often as important as price in today's
Do they set themselves apart from the others by offering
innovative marketing plans to sell your home fast and for top dollar?
Will they set up an aggressive marketing program to ensure your
home is exposed to hundreds of qualified buyers? How much money does this agent
spend in advertising the homes s/he lists versus other agents. In what media do
they advertise, (newspaper, magazine, TV. etc.) Do they use a 24 hour hotline,
"For Sale" signs, lock boxes, a Tour of Homes program, and Talking
House signs and transmitters? What does this agent know about the effectiveness
of one medium over the other?
Tips on Selecting a Contractor For Home Improvement
Home repairs can cost thousands of dollars and are the subject of frequent
complaints. Here is a list of things to consider when selecting a
- Get recommendations and references. Talk to friends, family and other
people for whom the contractor has done similar work.
- Get at least three written estimates from contractors who have come to
your home to evaluate what needs to be done. Be sure the estimates are based
on the same work so that you can make meaningful comparisons.
- Make sure the contractor meets licensing and registration requirements
with your local consumer agency. Some areas require licensees to
pass tests for competency and scrutinize licensees for financial solvency.
They may also have a fund to cover some financial losses that result from
problems with licensed contractors.
- Check to see if local laws limit the amount by which the final
bill can exceed the estimate, unless you have approved the increase.
- Check contractor complaint records with the Better Business Bureau or
- Get the names of suppliers and ask if the contractor makes timely
- Contact your local building inspection department to check for permit and
inspection requirements. Be wary if the contractor asks you to get the
permit. It could mean the firm is not licensed.
- Be sure your contractor has the required personal liability, property
damage and worker's compensation insurance for his/her workers and
subcontractors. Also check with your insurance company to find out if you
are covered for any injury or damage that might occur.
- Insist on a complete written contract. Know exactly what work will be
done, the quality of materials that will be used, warranties, timetables,
the names of any subcontractors, the total price of the job, and the
schedule of payments.
- Try to limit your down payment. Local law may specify that only a certain
percentage of the total cost may be made as a down payment.
- Understand your payment options. Compare the cost of getting your own loan
versus contractor financing.
- Don't make final payment or sign an affidavit of final release until you
are satisfied with the work and know that subcontractors and suppliers have
been paid. Local lien laws may allow unpaid subcontractors and/or unpaid
suppliers to attach your home.
- Pay by credit card when you can. This may allow you the right to withhold
payment to the credit card company until problems are corrected.
- Be especially cautious if the contractor:
- comes door-to-door or seeks you out;
- just happens to have material left over from a recent job;
- tells you your job will be a "demonstration";
- offers you discounts for finding other customers;
- quotes a price that's out of line with other estimates;
- pressures you for an immediate decision;
- offers exceptionally long guarantees;
- can only be reached by leaving messages with an answering service;
- drives an unmarked van or has out-of-area plates on his/her vehicles; or
- asks you to pay for the entire job up front.