Should You Insure Your Landscaping?

You've bought a house and insured the structure, the furniture and your most prized possessions.  Should you also insure your trees and shrubs?

Check your homeowner's policy.  You'll probably find that coverage for your landscape is quite limited.  Most basic homeowner's policies pay a certain percentage, say 5%, of the total coverage limit of the home for damaged landscaping, with payouts for any one tree, shrub or other plant capped at $5,000.

Homeowners' policies typically only cover losses in certain situations — like fire, lightning, explosions, theft, riot and civil commotion or damage from passing cars. If a tree falls on an insured structure during a wind, ice, snow or hailstorm, policies will pay to remove the tree and to repair the structure. But they usually won't pay to replace a tree felled by a storm.

Since weather-watchers have predicted more severe storms in the coming years, many homeowners are looking to add wind riders to their policies, but check with your carrier, since not every insurance company offers such policies or riders.

Even if you can't get or don't have insurance on your trees and incur a loss, you still may be able to claim a deduction for such a casualty loss on your federal income tax.  The Internal Revenue Service defines such a loss as "resulting from an identifiable event of sudden, unexpected, or unusual nature," and includes the usual incidents that most insurance companies cover, as well as storms, floods, vandalism and soil and air pollution.

Buying Foreclosures: Things You Should Know

If you're considering buying a foreclosed property, there is a lot you should know if you have never done it before.  Yes, there are a lot of great deals in the market these days, but there are different stages of foreclosure and the more you know, the more you can protect yourself.

Pre-foreclosure is when the homeowner still owns the property and knows there is potential for foreclosure. They’re likely not current on their payments and are in danger of destroying their credit and losing any equity they have.

The second option is buying at auction.  Approach this method with caution - there is a lot of risk such as liens on the title and unknown repairs.  Also, cash is typically needed at this stage if you beat the bank's bid and win the auction.

The last option is post-foreclosure.  At this point, the home is known as REO - real estate owned property by a bank or lender.  The bank won at the auction and is now selling the home to recoup as much money as possible - at least what is owed on the property.  The bank will most likely hire a local real estate agent to put it on the market.  The longer the home is on the market, the more willing the bank is to work with you on selling price.  Keep in mind, banks do not want to be in the business of owning real estate – they want to get rid of it as quickly as possible.

Here are a few things to keep in mind when purchasing a foreclosed property:

1. Get a full approval from a mortgage lender who has verified your income and assets. This will give you more negotiating power.
    
2. Pick a zip code you are interested in and do research on what homes are selling for and the recent trends with property values in that area.
    
3. Get an inspection done and make your offer contingent on satisfactory results from the inspection.
    
4. Determine potential repairs and their costs.
    
5. Remember you have the upper hand in negotiations when it comes to the bank paying closing costs and making repairs.

Be cautious and patient in the foreclosure buying process.  If handled properly, you could find a great home in which you may have some instant equity.

Considering a foreclosure?  Have any questions?  Post them here by using the "Comments" link below.