It’s a Buyer’s Market – But There’s a Catch
Quick Take: Buyers have more leverage in 2025 - but deals are falling apart over something most people aren’t watching: home insurance. Learn what’s changed, and how to protect your money, your home, and your future.
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The Market Has Flipped: Why Buyers Are in Control
Redfin data shows nearly 500,000 more sellers than buyers nationwide - marking one of the largest inventory gaps in years. With rates hovering around 6.8%, affordability is still tight - but buyers now have options, leverage, and negotiating power.
Concessions, price cuts, and better terms are on the table - but this buyer’s market has a catch. Beneath the surface, a new threat is blindsiding even experienced buyers and collapsing deals before they close.
The Insurance Crisis That’s Undermining Deals
Insurance is the new wildcard. State Farm recently secured a 17% rate increase on California homeowner policies. For landlords, the increase is closer to 38%. Other carriers are pulling out of entire ZIP codes due to wildfire and climate risk.
This shift has major consequences:
- Buyers can’t get coverage
- Lenders can’t fund loans without it
- Deals fall apart in escrow - sometimes after all contingencies are waived
Why This Matters (Even If You’re Not in the Hills)
Insurance is required by every lender. No policy, no loan. Buyers who waive insurance contingencies to stay competitive are at the most risk - especially if they discover too late that their home doesn’t qualify for affordable coverage.
That leads to a difficult choice:
- Walk away and lose your deposit
- Pay for lender-placed insurance (which only protects the bank)
- Or breach the contract entirely
This isn’t hypothetical. It’s happening every week - especially on hillside homes or properties with older roofs.
Why Sellers Should Care Too
As a seller, your deal is only as strong as the buyer’s ability to insure the property. With higher rates and tighter guidelines, buyers are walking away when insurance doesn’t check out.
In Pacific Palisades alone, over 2,000 homes burned in January. Even untouched homes in nearby ZIP codes are now flagged. Expect buyers to ask harder questions - and expect slower closes if your property doesn’t meet today’s standards.
How Buyers and Sellers Can Stay Ahead
For Buyers:
- Get insurance quotes before removing contingencies
- Ask about roof age, brush zones, past claims, and local fire history
- Verify coverage before finalizing your offer
For Sellers:
- Know your home’s insurability - don’t guess
- Update and disclose upgrades that lower risk (like Class A roofing)
- Price based on what buyers can afford, not just past comps
Frequently Asked Questions
Why Are Buyers Gaining More Leverage in 2025?
Inventory has spiked and rates remain high. With fewer bidding wars and more time to decide, buyers are negotiating better terms - including price reductions and closing credits.
How Can Insurance Kill a Deal Even After Escrow Starts?
If you remove contingencies before confirming insurability, and your loan requires a policy that isn’t available or affordable, you could lose your deposit - or worse, be forced into expensive lender coverage.
Are There Certain Homes That Are Harder to Insure?
Yes. Homes near brush zones, with older roofs, or with a history of claims often face denial or massive premiums. Some only qualify for California’s FAIR Plan - which doesn’t cover everything.
What Should I Ask My Agent About Before Writing an Offer?
Ask about roof age, past claims, fire zone maps, and whether the seller has current coverage. A quick pre-offer insurance check could save you thousands later.
What If I’m a Seller - How Do I Protect My Deal?
Pre-qualify your home for coverage. Talk to an agent about current policy options and rates. Address any red flags (like brush clearance or outdated roofing) before going to market.
Ready to navigate this market with clarity?
Book a 20-minute strategy call. We’ll walk you through your insurance options, prep strategy, and deal structure—no pressure, just answers.