The Pre-Listing Question Nobody Asks: Can the Next Owner Insure It?
By Victoria Sharma
The pre-listing checklist for sellers over the last twenty years has been fairly standard. Price it right. Fix what shows. Stage the main rooms. Insurance never made the checklist because insurance was a formality. It was something the buyer's lender handled after the inspection and before the funding.
Today, that assumption no longer holds, and it costs sellers deals they never knew they lost.
Look at what has happened in California, where the shift has been the most dramatic. The California FAIR Plan, the state's insurer of last resort, had 204,868 dwelling policies in 2020. By 2025, it had 621,234. The value it insures grew from approximately $115 billion to approximately $645 billion during that same period. On October 15, 2026, its average rates increased 29%. A program originally designed to be a narrow backstop for homes that no other insurer would write has become the default for a significant portion of the state's housing. (Our California FAIR Plan data breaks this down county by county.)
Why is this important during listing?
A buyer with a mortgage has to secure a homeowners policy before the lender will fund the loan. In high-risk areas, the only option may be a FAIR Plan policy plus a separate policy to fill its gaps, which can add hundreds of dollars to the buyer's monthly cost. That changes the buyer's debt-to-income ratio, and sometimes the buyer simply walks away. The math changes, but the house does not.
Most sellers learn about this problem at the worst possible time, once escrow has opened. By then the seller has already moved out, turned down other offers, or made other housing arrangements, and the buyer's agent calls to say the insurance quote came back and there are issues.
This is what sellers can do before listing their home.
Get a quote on your own house. Reach out to an insurance broker and ask what it would cost a new buyer to insure the home today, not what you pay now. Long-time owners often have rates a new buyer can't get. If the only option is the FAIR Plan, you want to know that before your first showing, not after your first offer.
Fix what insurers care about. Roof age is an important factor. So is the age of the electrical panel, the plumbing and wiring, and in fire areas, the space around the home. A roof with a few years of useful life left can mean a regular policy instead of a policy of last resort. Clearing brush and installing ember-resistant vents also help.
Gather your paperwork. Insurance brokers can work faster with permits, roof certifications and records of recent upgrades. In California, the seller's natural hazard disclosure already tells buyers if the home is in a fire hazard zone, so insurance will come up regardless. It's good to have the answers ready.
Price with insurance in mind. A home that requires a FAIR Plan policy usually competes against similar homes that don't, and buyers factor the higher cost into their offers. Knowing your full cost of selling and setting expectations early helps avoid surprises during escrow.
Think about your potential buyers. Some homes, like those in high fire-risk areas or with older systems, are harder for a financed buyer to close on right now. When that's the case, it makes sense to compare a traditional listing with other options, including selling the house as-is to a cash buyer. Cash buyers still have to insure the property and factor that cost into their offers, so it's not a way around the problem. But there is no lender deadline, which is what kills many of these deals.
Just because your home has insurance issues doesn't mean it won't sell. Plenty do. The difference is whether the seller found out about the issues before or after the home was listed.
Insurance used to be the buyer's problem. In a lot of areas, it is now part of the sale itself. The sellers who check it first are the ones who keep their deals together.
About the author: Victoria Sharma is the manager of Cash Home Buyers CA, which buys homes directly from owners in California.