Galvanized pipes, commonly installed before 1960, have been found to corrode and rust on the inside over the decades. Credit: Eakrin -

Many Berkeley home sellers have faced an increasingly common issue: updates required by insurers come in at the last minute, allowing buyers to ask for credits on the sales price. Owners looking to sell property in the coming year can use this information to plan a smoother transition. 

Insurance providers are taking longer to vet properties and being more critical about certain items than they might have been in the past. This is due, in part, to a shrinking pool of insurers, as several companies dropped out of the California market earlier this year.

Since all mortgages require the buyer to have home insurance, and policies can’t be accurately quoted until the specific buyer and property can be vetted, many issues are coming up at the 11th hour of escrow.

Two common problems are electrical wiring and plumbing. The East Bay has many pre-1940  homes, and many have knob-and-tube wiring, which is often considered a fire hazard. Also, many have galvanized plumbing, often considered less reliable than copper. And both are fairly expensive to update. 

Knob-and-tube electrical wiring was popular until about 1940. As rubber parts become brittle with time, it can become a fire hazard. Credit: AC Photography –

Many insurance companies are flagging these types of properties. Since these buyers are putting locks on their mortgages, if the transaction takes longer to close, the buyers can lose that lock, and that will impact their monthly payments or cause a renegotiation of per diem holding costs.

These forces are beyond an individual’s control, but they can be sidestepped. Many Red Oak agents recommend that sellers address these potential issues before putting a house on the market. A $30,000 upgrade can prevent a $60,000 buyer credit down the road. Some of these issues may improve as the California government aims to make insurance more available throughout the state.

Prices up since last fall

While expensive upgrades can be discouraging, the good news is that demand in the Inner East Bay has remained relatively strong and prices have stabilized — in September, the median price was up 6% since last year.

The market is particularly strong for move-in-ready, highly attractive properties. These sales often transact in the $1 million-to-$3 million range, and we continue to see high levels of competition here, with properties in Berkeley selling an average of 19% over the list price in an average of just 23 days on the market. 

Properties that sell below $1 million, however, are not faring as well — likely because those buyers are more sensitive to increases in mortgage rates. These properties are selling an average of just 3% over the list price in an average of 28 days. For more information, take a look at Red Oak’s Q3 2023 market report for the Inner East Bay.

Looking forward to 2024, we expect the Inner East Bay market to remain tight for highly desirable properties. Those with a smaller buyer pool — particularly those in the lower price range as well as those above $3 million — may continue to face headwinds. 

But no matter your situation, careful strategy and negotiation can help you reach your goals. Reach out to your Red Oak agent, or contact Red Oak here, for expert guidance.

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