Flooding can be a terrifying experience for any homeowner, especially in Houston, and sometimes, even a small flood of less than an inch is responsible for causing damage to delaminating flooring, rusting metal, rotting wood, and a lot more. There is no doubt that this can be a frightening experience, but it also poses a financial risk that can be threatening. This also goes to the ones who are selling a flooded home.
It is a fact that the majority of buyers in Houston will turn their back and run as soon as they come to know that they are interested in buying a home that has previously been flooded or has a flooding risk. So, it doesn’t matter how much has been spent in restoring it to the previous condition. Therefore, it can be challenging to sell a house damaged by groundwater in the past, whether or not flooding occurred on the property.
Evaluate the damage
When you are able to sell a house that has been flooded in the past, the most important thing for you is to make sure that it is clean enough to prevent any mildew and mold growth. You need to make the evaluation and get a big picture of the damage that has been caused. Keep in mind that this is not the essential step in selling your property, but it can indeed be constructive for the buyers to put them at ease by knowing that the property has been evaluated by a licensed professional.
Whether or not you have any plans of repairs, having flood inspectors laying out the complete details of what has to be done can undoubtedly be very helpful. It is never a bad idea to get the opinions of different people so that you can present a completely fleshed-out plan to your potential buyers. This way, the buyers will be comforted by knowing what they need to expect financially.
When does it make sense to sell your home as-is?
Water is no doubt a powerful source and is capable of laying waste to homes in a matter of minutes. Although it damages or destroys valuable assets as well as prized possessions, it can, unfortunately, compromise the stability of the infrastructure of a home. Therefore, when you are planning on how to sell a house that has suffered water damage will surely cost you a bit.
There is a possibility that you may not have flood insurance, money to do the repairs, or even time to do it. If you are planning to sell a house with water damage quickly, one option for you is always available, selling the house as it is. Mostly the buyers have a complete understanding that repairs may be required for the homes in this condition in the flood zones.
There are many buyers who may not be that scared by damage caused by flooding events, as there can always be a market for the fixer-uppers, but it is vital for the buyers to feel confident that they got a good deal on the house. When selling the property, you have the option of going through the traditional route with the help of a real estate agent, but you must keep in mind that it will take a while to sell a house, and it may sit in the market for some time. This may cause a negative effect on the selling price of the property, and after the sale, you can be on the hook for commissions and fees.
When you go with the home buying company that buys through cash, then you will be able to remove any time and cost concerns of a traditional marketplace. These buyer companies have experience working with hundreds of individuals and are completely aware of what is happening in the market today. They will surely help selling water-damaged homes in Houston quickly and easily.
When it makes sense to repair the house before selling?
Floods can always happen quickly without giving much of a warning. If you can access your home, you might have to work fast to contain the damage in any way possible. If you are able to address the issues in a quick manner, you have a better chance of preventing a complete loss. The FEMA disaster recovery centers can also be of great help when you go through such situations, whereas there are also flood maps that have been created under them that give warnings for free, understand the risk and take different actions to protect homes, families, and businesses.
In the next step, you can start by contacting your insurance company by informing it about your claim and ask it to send an adjuster to your house. You need to catalog any or the entire damage then. You can take photos and make notes, but don’t try to throw anything because the insurance company visual evidence of any damaged items before your policy gets honored.
You always have a choice of doing some repairs before you make an offer to sell a home to the buyers, especially in Houston, where chances of floods are always there. Keep in your mind that repairs can be quite extensive because it all depends on how much water has got into the home. If you are experienced in sheetrock or drywall, then handling everything yourself can be cost-effective, or there are chances that you can hire a contract if you have everything in your budget for such tasks and get rid of any hassle.
When you make even the more minor improvements and spend money on cosmetic things like applying some fresh and neutral paint on the walls and thoroughly polish the floors, you will obviously see a significant improvement in your home’s selling price. If you are residing in one of the risk areas and have more structural and more significant issues, you should be completely aware that such remediation can be quite expensive for you and cost you a lot of money. Therefore, in the end, you may find that all the hassle isn’t worth it.
Recommendations to address damage caused by water before sale
When you get your house inspected after water damage, the first step is to investigate it immediately after the flood. If the damage is there, then it is necessary for you to address it one way or the other. Once you are able to know that there is some leakage, it may get to the point where it is and what it is.
A number of real estate investment experts have a number of recommendations as they keep purchasing properties nationwide, and when it is about selling the property in Houston, they indeed have a few words of wisdom.
- Never hide your home’s current water damage or its history
Many sellers try their best to conceal the damage from the buyers with such solutions that may not be reliable, including spray foam insulation and drywall. This is obviously not fair and can lead to legal battles. Therefore, as a seller, it is always recommended that you don’t let this happen, and if you know it, then you should disclose it.
- Try to research any mold remediation options
You have two options here, either do it yourself or let the buyer handle things. It is worth noting that if you let the buyer handle it, then there is quite a chance that you will get a much lower purchase offer. Other than that, if you choose to offer a repair credit, then it is pretty likely that you may end up bringing much more money to the table than the actual cost to rectify the problem.
- Repair any areas that are damaged
You can make a call to the insurance company and then remove all the items that have been damaged by the flood, including furniture, rugs, mattresses, etc. Usually, the plaster ceilings in houses can survive the mold in a much better way than the sheet-stone; therefore, it is always advised to replace the sheet-stone.
- Give the remediation measures in writing
There should be a clear statement in your sales contract regarding all the steps you have taken to mitigate the water damage in your home. Any paperwork or receipts that are related to the contract work and the remediation services should be saved by you. There is a possibility that you may need to present them during the transaction process as proof of the work that you have completed.
How to calculate the value of real estate after a flood?
There is quite a misconception by a number of flooded homeowners that the value of their houses after the flood is its worth before the flood minus the cost of repairing the home. There is a part of the equation that many sellers forget, and this includes the potential decrease in the home value, even after it gets fixed, while there is also a profit for the investor for covering their time as well as risk.
Many people may not have a whole idea of how the houses flooded in Houston is going to affect the value before they make any offer. It all depends on various factors, like the location of the house, how bad it was flooded, and the number of times it got flooded. Other factors include the price range of the house, changes in demographics, and also the current neighborhood aesthetics. There are a number of people who are basically owners of a residence before the flood, and later on, they become renters in the inhabited post flood.
Your real estate agent will tell you that the investors usually take around 10-20% off the pre-value of the home as the potential new value, even after you do a complete renovation. There are certain areas in which the value happens to quickly bounce back, while many other areas may take a hard hit for a longer time. This factor is quite an unknown one, but the majority of investors feel free to play it to keep themselves on the safe side when making offer, and your real estate agent obviously remind you of that.
Investors always want to turn their profit into an investment, and in order to rehab a flooded home, it can take a few months. During all this time, the investor has to pay the interests, holding costs, spend money on rehabbing the home, and face any unexpected expenses during all the process. This way, after knowing the full effect of the flood, the home’s end value gets finished. When the investor has a plan to sell the home once it is done, there can be real estate agent commissions and closing costs to get the house sold.
Who is a home buyer for a house with flood damage?
In the majority of cases, it is the investor who happens to purchase the home if you offer to sell it. The flooded homes can rarely get conventional financing and are generally limited to hard money or cash purchases. The hard money lenders can loan on the house after repair and don’t require any inspections to lend money on it. Only the investors use the hard money as short-term financing because the interest rate is in double digits until the home is fixed.
The motivation of selling a house damaged by groundwater varies according to the sellers. Some of the flooded sellers would want to sell the houses as quickly as possible, while others may require the money for the new home; therefore, it doesn’t matter for them if it takes time to sell the home.
Most people selling a home because they can’t afford the repair or don’t want to repair it, so some basic equity things can be done to make sure that the worth of the home gets more to the investor. The most important thing to ensure is that the home is mucked and all of the molded material gets removed. The inside of the home must be swept and vacuumed in the best possible way. The front and backyards need to be cleared of all debris, and you also need to mow them.
Once the home is purchased, the investors have to pay for many things that need to be done. There are times when a homeowner can find a volunteer group who would like to help get things done. If the investor’s expenses can be reduced, there is always room to increase their offer.