Rescue Your Clients From High TI Costs

With double-digit increases in both homeowners’ insurance and property taxes stymying many a would-be homeowner as well as pushing bunches of current owners into default, what these two executives and their staffs do has risen in importance, thrusting them to the top of the heap when it comes to solving lenders and servicers problems.

National Choices

This isn’t meant to be a commercial for the Incenter affiliates. There are plenty of other firms, both national and local, which do the same. And consumers can do most of the legwork on their own to trim their insurance premiums and lower their property tax. But the services Eagleson and Tulio provide have become invaluable, especially in light of the difficulties many buyers are having in qualifying for financing so they are worth a closer look.

Incenter Insurance is basically a national insurance broker that’s licensed in all 50 states. On the personal insurance side, the company deals with nearly two dozen carriers; on the commercial side, 33. It deals directly with consumers, offering complimentary reviews of their current or — and this is important to people trying to buy a house — potential policies in hopes of identifying less expensive options.

Lenders and servicers use the company’s services, too. And they can also “White Label” an embedded link into their platforms that enables borrowers to click through to Incenter Insurance’s site, where they can quickly search for policy alternatives on their own. Borrowers are not charged anything, but the hope, of course, is that they will allow Incenter to place their coverage.

Covered

It works something like this: During a one-on-one consult, agents take all the pertinent information to help determine the appropriate coverage, not just for cost but also for exposure to risk. Armed with that, the agents then shop for quotes. “We don’t try to shortchange it,” says Eagleson. “We build policies based on the best value. Our job is to find the best fit. If we can save the client money, great. But if not, we explain why the (more expensive) policy offers the better coverage.”

Incenter Tax works essentially the same way in that it offers consumers the opportunity to lower their property tax stipends, again at no cost. If, after reviewing the latest assessment, the company determines there is a reason to appeal, it offers to handle the process on the property owner’s behalf for a one-time contingency fee.

The company works through 10,000 appraisers and attorneys nationwide who review the client’s assessment. If the company wins the appeal — and it boasts a 93 percent success rate vs. the 60 percent rate among consumers who handle the process on their own — it takes half of his first year’s savings. But every year thereafter, the savings will be all his, at least until the property is reassessed.

The company works directly with consumers. And like Incenter Insurance, its platform can be private-labeled on lenders’ and servicers’ platforms, where consumers can be just one extra click away. Obviously, property taxes are based, in part, on the most recent sales price. Consequently, there is little a buyer can do to lower the tariff until he takes occupancy. So Incenter Tax won’t be much help in qualifying buyers for loans. But it can be a big help to owners of all ilk, including those facing financial difficulty. CEO Tulio tells me it trims its residential clients’ tax bills by about $4,600, on average.

Hands On

Okay, that’s the plug. Now let’s get down and dirty with information to help your clients cut their insurance costs and property taxes all by their own selves:

• Property taxes — Estimates vary, but experts say that anywhere from 30 percent to 60 percent of all property is over-assessed. Better yet, as long as homeowners follow the rules regarding deadlines and other requirements — every jurisdiction has its own criteria — the appeals process is relatively simple.

Borrowers should start by doing the math. Multiply the tax rate — say $1.50 per $100 of assessed value — times the home’s assessed value. So if the place is valued at $300,000, the tax should be $1.50 times 3,000 or $4,500. If the arithmetic is incorrect, the tax man will have no choice but to recompute.

Next, they should look for errors in the assessor’s description of the property. Your client may be down for four bedrooms when he has only three or one acre when he has only half that. Any discrepancy in his favor will likely lead to a lower assessment.

Tell him to ask for a copy of his assessment record, aka worksheet or appraisal card. Every property has one and everyone has a right to see theirs. The record will list everything the assessor believes contributes to value: location, size, amenities, and so forth. Mistakes are not uncommon and it’s the borrower’s job to make certain everything is correct.

Next, he needs to gather ammunition to prove the property has been assessed unfairly. Like properties should carry like assessments, so he wants to make sure the house is assigned the same value as similar properties in the area.

Here, owners will need to find out what properties the assessor used for his comparisons. Then, they need to check them out to see how they differ. One might have a two-car garage, for example, and their place has only a carport. Or one might be all brick while theirs is of wood-frame construction clad in aluminum siding.

Another option is to have the property appraised by a professional to see how it stacks up to the assessor’s comparables or five to 10 others that are identical to theirs or nearly so — same model, lot size, improvements, upgrades, and finishes. Then look for any and all differences that make their house less desirable.

• Homeowners Insurance — First and foremost, borrowers need to shop ‘til they drop — every year, the experts recommend — and narrow their choices to the best three based on their price ranges, the breadth of their coverage, the quality of their services, and their financial stability. Once they get to that point, they should ask for specific price quotes. But they must be certain they are comparing apples to apples, with the same coverages and deductibles.

When they are placing a value on a property, owners should make sure they don’t include the value of the ground it is sitting on. The land a house is on is not at risk.

Another way to trim insurance costs is by raising the deductible to an amount the insured can comfortably afford should he have to file a claim. If the owner can jump his deductible from $500 to $1,000, for example, he can trim his premium by as much as 25 percent. The higher the deductible, the more the savings.

Borrowers should also consider bundling their homeowners’ policies with their automobile and other coverages with the same carrier. If they have two or more policies, they might be able to cut their premiums anywhere from 5 percent to 15 percent. But they should make sure the combined price is lower than separate policies with different carriers.

Another tip: Owners should ask their insurers what they can do to make their houses more resistant to natural disasters. Adding storm shutters or reinforcing a roof also may be able to save some money.

They should also ask about discounts for smoke detectors, burglar alarm systems, and dead-bolt locks. Some companies offer discounts of up to 20 percent. Price reductions also may be available if the insured is retired. If someone is at least 55 and no longer working, as much as a 10 percent discount is available through some companies.

Establishing and maintaining a good credit record can cut costs as well. Insurers almost universally use credit scores to price their policies. So advise your borrowers to pay on time, not to use more than 30 percent of their credit limits, and otherwise keep their financial noses as clean as possible.