Traditionally, homeowners can insure against physical damage like fires or storms, but not against price drops in the housing market.
But now, there's a new real estate insurance safeguard, available in California and Nevada, that gives homeowners a way to protect one of their largest investments—their home equity.
Home Value Lock gives homebuyers added protection by reimbursing up to 10% of a home's purchase price if they need to sell within three years during a market downturn.
"Million Dollar Listing" star and real estate agent Josh Altman, a Home Value Lock advisor, describes the coverage as a “game changer."
"It's a way to help the everyday homebuyer, and it could save someone from being in a really tough situation," Altman tells Realtor.com®.
How Home Value Lock works
For about the same cost as a home warranty, the program allows homeowners to lock in a portion of their home’s value at closing. It provides financial protection if the market declines and the home is sold for less than its insured value within the first three years.
Home Value Lock is available only for primary residence, single-family homes. The policy covers up to 10% of the purchase price if the home is sold in a declining market.
"Hopefully you never have to use it, but there's so much uncertainty, interest rates are up, and things are happening globally that change things," Altman explains. "This can help homeowners sleep better at night."
Home Value Lock uses the StreetMatrix Index to track how home values change in a homeowner's local market.
Whether driven by economic shifts, financial instability, or natural disasters such as floods or fires, this coverage helps preserve the value of qualifying homes.
"For instance, wildfires in California can affect resale values and cause volatility," Home Value Lock founder and CEO Oliver Tickner tells Realtor.com. "This is good insurance for this kind of situation."
That’s because claims are based on how the local market has changed—not the home’s individual sale price, he explains.
For example, let's say you purchase a home for $500,000, and decide to sell two years later. In that time, home values have fallen 10% according to the StreetMatrix Index. In this scenario, you would receive $50,000—10% of the original sales price.
As with any insurance product, coverage terms and eligibility requirements apply.
How much it costs—and how much it covers
The cost of coverage varies based on several underwriting factors, but as a general example, $25,000 of coverage costs around $350.
“A ballpark of about 1.5% of the purchase price is where we attempt to land,” says Tickner.
The fee is paid once—typically at closing—with no ongoing costs.
While the program is available for homes priced above $1.5 million, coverage is capped at 10% of the insured value, up to a maximum of $150,000.
“At a couple hundred bucks to get this, it’s a no-brainer,” says Altman. “Especially when it can protect you against a loss of up to $150,000.”
A new approach to home value protection
By safeguarding homeowners’ equity from market declines, the company is introducing a home value protection concept—akin to insurance—that has not traditionally been accessible to individual property owners before.
“It just seemed like there was a massive gap in protection for homeowners,” says Tickner. “It gives homeowners peace of mind, and a little bit of protection and comfort there."
This gives people a way to hedge against potential dips in property values while still benefiting from homeownership.
"I've made money on real estate, and I've lost money on real estate," says Altman. "When you lose money on a house, you don't forget that feeling. This can help protect against that."
The maximum term length for coverage is three years, and the insurance can be purchased up to 60 days after the close date.
"I don't see why someone would buy a house without it," says Altman.
Following successful launches in California and Nevada, Home Value Lock is now rolling out nationwide.
“We should be expanding into Utah and Arizona next month,” says Tickner.
The program is expected to be available in 10 states by July.
