The Walters Agency Podcast

How Insurance Shapes Buying, Selling, and Value in Real Estate with Timothy Walters

• Timothy Walters • Episode 16

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How Does Insurance Impact The Real Estate Business? 

Closings don’t fail at the kitchen island—they fail at the roof. We pull back the curtain on how insurance actually drives real estate timelines, approvals, and final numbers, from the first lender requirement to the binder that gets your deal across the finish line. With Timothy Walters of The Walters Agency, we unpack the differences between replacement cost and actual cash value, why a carrier’s reconstruction calculator rarely matches your purchase price, and how roof age and materials can shut doors or unlock better rates. If you’ve ever been told to “get a policy” two days before closing, this conversation shows a smarter path.

We walk through the buyer’s playbook: ask your loan officer exactly which coverage form and minimums they require, start quotes as soon as your offer is accepted, and prepare for curveballs like prior claims on the property. Tim explains how to read carrier appetite, when exterior photos and inspections are needed, and which endorsements—like ordinance or law or water backup—turn a bare-minimum policy into real protection. For sellers, we outline a practical prep list that boosts price and insurability: fix soft floors from slow leaks, refresh worn siding, and address roofs that make underwriters balk. Clean documentation of updates and repairs can shave days off underwriting and keep buyers confident.

Love historic homes? We cover the hidden realities: premium materials, like-for-like craftsmanship, and the extra questions underwriters ask about wiring, plumbing, and basements. Expect longer timelines for older properties and plan accordingly. Along the way, Tim shares why early collaboration among agent, lender, and realtor prevents last-minute scrambles and delivers better coverage at a better value. Ready to replace uncertainty with a plan that closes? Subscribe, share this with your agent or lender, and leave a review to tell us what part of insurance in real estate surprised you most.

To learn more about The Walters Agency visit:
https://www.brightway.com/agencies/tn/knoxville/0237/team
The Walters Agency
7009 Asheville Hwy
Knoxville, TN 37924
423-417-2070

SPEAKER_00:

Welcome to the Walters Agency Podcast, where insurance meets peace of mind. Hosted by licensed insurance agent and owner Timothy Walters, we're here to help families, homeowners, and small business owners throughout East Tennessee protect what matters most. Our mission? Creating win-win-win solutions for insurance. Let's dive in.

SPEAKER_02:

Buying, selling, or investing, insurance plays a bigger role in real estate than most people realize. In this episode, Timothy unpacks how coverage decisions can shape transactions, timelines, and long-term value. Welcome back, everyone. Skip Monty here, back in the studio with Timothy Walters, owner and operator of the Walters Agency. And Tim, welcome back to the show.

SPEAKER_01:

Hey Skip, thank you very much. Good to be here.

SPEAKER_02:

Glad to have you back and really intrigued. I know the real estate market is a little different today than it was a year ago, and hopefully it'll be different from what it is a year from now. But really interested in kicking things off here about insurance and how that impacts the home buying or selling experience. Take it away.

SPEAKER_01:

Yeah, Skip. So yeah, insurance kind of affects everything when either buying or selling a home. A lot of people don't really, I think, really consider it because unless they've been involved in insurance or in real estate or in lending or have bought and sold maybe more than one property in different kinds of conditions. Um, but it it can absolutely have a major effect on you know whether or not deals can go through. So you and I were kind of talking about it before the show started. Of course, as a buyer, you're always going to have to go through a certain level of discovery on a property. You know, you might see it online. So, oh, this is really nice. You go out and see in person, maybe you notice some details that will put you off of it. But say you don't, and you know, continue on, you've got your realtor, you're doing the investigation, everything's looking good, you're getting your loan put together, unless you got you know money bags and you can just you know plunk the cash down, which if so, give me a call. You know, I might you know need to arrange some financing for my business or something. But so you know, when you're bringing the the third parties in, the the loan, the loan officers, you know, they're gonna have their underwriting requirements, and they're going to anytime a bank or a financial institution is gonna put money on a house or a building that you're buying, they're gonna make sure that their interest, at the very minimum, their interest is protected. So they're gonna require some form of insurance. So for homes, typically, in my experience, what the vast majority of loan officers are going to request is proof of replacement value policy or an actual cash value policy, which is replacement depreciated by time. Some people also call it market value, which is not exactly true. I don't know why they do. But most loan officers are gonna look for some kind of replacement value policy. And here's the thing that trips people up about the insurance for homes. So replacement value doesn't mean the insurance company is necessarily going to give you$400,000 for a house that you bought for that amount. You got a loan for$400,000 on that house. If that house only costs, say,$350,000 to rebuild, if it's completely destroyed, replacement value means they're going to try to replace the lost property as close as possible to what it was before it was destroyed. Okay. So, you know, that's one thing to keep in the back of your mind when you're dealing with insurance. Um now, if you do say have a smaller loan, sometimes you'll see actual cash value prop policies will have like whatever the face value of the insurance say is again, we'll just use$400,000 as an example. Say you put that money down, and the insurance company that you're working through will write you a policy for$400,000, that's the most that they'll pay out for the structure. Okay, so if you lost your house the day after you closed on it, let's say it burned down for whatever reason, yeah, that would clear off your loan. So the loan company is gonna be fine with that. They'll they'll usually go through with a deal. But those those specifics, those, those distinctions are kind of important to keep in the back of your mind when you're starting the home buying process. So I would recommend anybody buying a house, when they're talking to their loan officer, ask them directly, okay, what kind of insurance are y'all gonna require for this property, you know, when we close it? And and start getting quotes because again, people don't really understand like what the replacement value is. Uh, and you know, we don't know either until we actually put the information about the home end and the insurance company systems, they come out with what they think it's gonna cost to replace the structure, and that's the estimated replacement value. Okay, you know, that's just like you said, people don't think about it, unfortunately, until they call us two days before closing, and then maybe there's an issue, maybe the replacement value is not maybe necessarily high enough, you know, for the satisfaction of the loan officers, or you know, there's some other issue. Maybe it's maybe there's something going on with the house that makes it difficult to insure. That happens to us a lot, especially because insurance companies have gotten very uh particular about roofs. They do not like older roofs, especially older shingle roofs. We were going through about 18 months where a lot of our companies would not do a shingle roof that was over 10 years old, period. No way, it didn't matter what the rest of the things look like. That really made it hard for us to place business. And so, of course, that made it hard for us to come through on a timely manner if somebody called us like two days before closing, you know, needing you know an insurance solution, because we'd have to shop everybody, you know, to get that taken care of, and that takes time. So I would also recommend people, when they're talking to the loan officers, ask them what kind of insurance this thing is going to require to satisfy the loan, and then reach out to some agents to start the quoting process as soon as possible because you never know what's gonna pop up, you know, what kind of challenges there might be to placing insurance on a particular risk. Even if it looks great, you know, there might be some, there might be a claim from the previous owner that pops up on the records that could cause issues. You don't know what's gonna happen. Uh, and that's from the buyer side. From the seller side, it's kind of a mirror. So if you're looking to sell your house, you know, say I'm gonna sell my house, I'm gonna get a lot of money for it, very excited. You know, I've sold a house before, it is kind of exciting, so you gotta figure out where else you're gonna live. And you know, it's great, be honest about the condition of your house. You know, look at it, try to look at it from the perspective of somebody who's never seen the house before, uh while also knowing what you know about the house. So if you know that there's like been a slow leak in the bathroom for several years that's caused the floor to be soft, you know, you want to get that fixed to get the most for your money, right? Because buyers are not gonna like that. They're gonna come in, they're gonna feel that squishy floor, and they're like, no, I don't want this. If your roof looks like it's about to, you know, just absolutely fall in because it hasn't been replaced in 40 years, you may need to go ahead and go for the expense of replacing that roof. Because, again, going back to the roof thing, older roofs especially make properties hard to insure. Like a lot of companies still do not. I mean, they've gotten a little bit more lenient on it, but especially shingle roofs, yeah, 10-15 years is still really hard to get past. Metal roofs, they'll typically be a little bit fine more okay with, you know, usually after 30 or 40 years. But again, the outside, like if you're if you have siding, if the siding's like halfway falling apart, yeah, maybe go ahead and get that that fixed because two things. One, that's gonna improve your ability to get a good price for the home. And two, it's going to mean whoever's buying your home is not gonna run into major roadblocks when they're trying to get the insurance, which is gonna be required to secure the loan that they need to buy your property. So, as a as a seller, you want to try to make sure that your property is in in decent enough condition to at least, you know, pass an insurance inspection.

SPEAKER_02:

I was gonna ask uh uh what should people know about coverage before listing their property, and I think you pretty much already answered that. So it's just make sure you got your every your ducks in a row, really. As far as you know, repair.

SPEAKER_01:

I will say, yeah, it's uh again, like I said, it's just to make sure that you don't get that hitch in the get-along at the end of the process. Because a lot of times, you know, unfortunately, you know, we're not contacted by either realtors or loan officers until almost the end of the process, you know, and I really wish that more, and I'm I'm not dinging them, I mean, I understand why, but you know, I think it would be helpful for everybody if we were brought in a little bit earlier in the process so we could actually have more time to run the quotes, you know, assess the risk and get the best possible solution for people without being under the gun time-wise. Because it does take time to do this. I mean, people don't understand, you know, nobody wants to watch sausage be made, nobody wants to watch their insurance be worked on. Uh, because it's frankly, it's kind of weird and boring. But you know, we make a lot of calls to underwriters. Sometimes we have to go out physically to the locations and take photographs, you know. I mean, so all of that takes time in certain situations.

SPEAKER_02:

Well, are there are there specific types of properties that require more nuanced insurance planning than others?

SPEAKER_01:

Yes, 100%. So, of course, a new a new build, like you know, something that's built in 2025, is gonna require typically a lot less underwriting unless it's like you know a multi-million dollar structure. You know, newer builds, standard builds are not gonna require a lot of underwriting unless there's some kind of special circumstance. Older homes depends on the carrier. I would say older when you get into like the vintage, you know, kind of kind of kind of classification, which I don't know. I mean, I'm I feel like I'm vintage at this point, but you know, I would say like early 20th century to pre-20th century houses are really, especially ones that still have like some of the markings of the original construction, like you know, the original uh decoration, trim, furniture, flooring, walls, you know, all that kind of stuff. That's gonna be, especially if you're doing a replacement policy, that's gonna be more expensive to insure because at that point the insurance company is gonna be on the hook for trying to pay to replace that kind of a as a lot of the stuff you can't, like you can't get like old, old, old hardwood anymore. It doesn't exist, it's all been used. But you know, it is a you can get facsimile, right? You can get things that kind of look like it, and that's more expensive. So if you if you're one to like if something happens to your vintage 1900 built fancy home in in North Knoxville, there's some really cool over there that yeah, you there's no way you can you could you know rebuild them exactly because the materials don't exist anymore, but you could get something that was a reasonable flat facsimile, it's just gonna be money, right? And the insurance companies know that. So they'll you know, listen, they'll they'll do some additional underwriting. And also for older homes, they're gonna want to know hey, has the wiring been updated? Has the plumbing been updated? Has you know, is there a sump pump, if there's a basement, you know, that kind of stuff. There's a lot of additional underwriting for older homes that is not going to be applicable to newer homes. When that kicks in really does kind of depend on the carrier. I have some carriers that it doesn't really kick in for until the house is like 50 years old. I have some companies that after the house is 20 years old, they're wanting you to do a questionnaire, you know. So it's uh it does kind of depend on which company you're you're dealing with, and it also depends on how much coverage is being asked for on the house. It depends on, you know, a hundred different factors. Um, but yeah, there's definitely gonna be additional underwriting depending on the age of the home, the type of building materials that have been used, the the value, the overall value of the home. So, yeah, 100%. So if you're buying an old an older home in a historical district, guys, do not drop that on your insurance agent the the day before you gotta do the deal. It's not gonna get done probably. Or at least not gonna be done properly. Yeah, I mean uh you might get you might get a policy, but you might want to revisit the policy as soon as the deal's over. Because I can't imagine doing one like that in less than a few days, at least. Especially because some of them, like I said, we do actually have to physically go out and do exterior inspections, photographs, little checklists, and kind of stuff.

SPEAKER_02:

So very good to know. Not that I'm gonna go out and buy a Victorian home in Northernoxville, but really good to know for the folks that might be.

SPEAKER_01:

Yeah, kind of cute little areas, man. I I I I kind of dig them a little hippie, hippie-ish, but you know, still fun, nice people. Yeah, yeah.

SPEAKER_02:

Well, I love old houses, but man, they're expensive. And I know this is a really deep subject, so I know we had talked at one time about potentially getting a a realtor colleague of yours on a show. Maybe we can do that in a future episode and go a little deeper.

SPEAKER_01:

Yeah, no, I think it it would be really good if we get a good realtor on, because I think a good realtor is going to kind of reinforce a lot of these points and probably have a lot of you know information that I wouldn't have because that's not my profession. I'd also like to get a loan officer, but they're they're as busy as we are, so that's like that's like uh yeah, that that's that that's a hard one to pin down, but uh I'm working on that. So awesome.

SPEAKER_02:

Well, I looked at the case.

SPEAKER_01:

I got a new one that actually just moved in. I met him the other day, so he he's a good he's a good guy. He's from California, he doesn't have any friends here yet. Maybe I can lure him in with some coffee and have a meeting.

SPEAKER_02:

There we go, and get him on a podcast. So yeah, so we'll we'll dig deeper, but this was very helpful and and very informative to Tim. So appreciate you joining us today, and we'll see you on the next episode of the Walters Agency Podcast.

SPEAKER_01:

Sounds great. Thank you, Skip.

SPEAKER_02:

All right, man. See you later.

SPEAKER_00:

That's a wrap on this episode of the Walters Agency Podcast. Ready to find the right coverage for your home, business, or family? Call or text 423-417-2070 for a free 20 minute consultation. Until next time, stay covered, stay protected, and keep winning with the Walters Agency.