Natural disasters, such as the recent hurricane in Florida or flooding in Houston, strike when least expected. Like other disasters, storms leave a trail of damage that affects people, properties, and the entire community. Such occurrence negatively affects real estate agents, as property prices not only plummet, but the pool of buyers and property sellers also drop.
Most buyers are cautious when purchasing the property after a disastrous weather event. Sellers also have to repair and renovate their properties before listing. That aside, selling storm-damaged properties can bring several risks to your real estate business. Below are important things that buyers, sellers, and real estate agents should know when dealing with storm-damaged property.
How do storms damage properties?
A storm is typically a bad-weather event comprised of strong winds, hail, and snow or rain. This combination can damage your house in several ways. The most common damage is water damage caused by flooding. Strong winds may also carry debris and other material, causing structural harm, including breaking windows and damaging roof tiles. Other property damage may result from falling trees.
Damage from these events might be mild, affecting a small part of your home and requiring small repairs, or severe. Depending on the extent of the damage, homeowners may have to repair their property before listing or finding a potential buyer.
Should you repair a storm-damaged house before selling?
Before selling a storm-damaged property, you should decide if you should fix the damage or sell the property as-is. The best place to begin your considerations is determining if repairing the property is worth it. While no legal requirement restricts you from spending on repairs before selling your home, you should ensure that you can recoup the amount spent after selling the property.
If you intend to profit from the property, you should seriously reconsider paying for the repairs. Renovating a storm-damaged property will only return the house to its previous condition. Therefore, potential buyers won’t deduct the cost of fixing these damages from their initial offers. However, it doesn’t guarantee that you can sell the property at a higher price.
Insurance doesn’t always compensate for storm damage
As you may reckon, insurance companies don’t like paying out compensation, especially for high-cost claims. Therefore, even homeowners with valid storm insurance policy may have to struggle before their insurance providers agree to reinstall a damaged roof or fix any other damage caused by the storm.
Like other claims, insurance companies may raise all manner of objections to your payout claim. Some may note that the weather event preceding property damage cannot be classified as a storm, which is covered by your insurance policy. Some providers may also shift the blame to you, putting the condition of your house into question.
Interestingly, most disputes between insurance companies and homeowners revolve around the weather event that caused damage qualifies to be called a storm. Resolving such issues requires a thorough assessment of various events that are considered to be storms. The increase in these disputes is what led to the introduction of the Financial Ombudsman Service, which mediates between insurance companies and homeowners.
Unfortunately, fixing your storm-damaged property before selling might be impossible if your insurance company doesn’t approve your compensation. This is because repairing wide-scale damage is expensive and doesn’t guarantee that you will get your money back after the sale.
Options for selling storm-damaged properties
Whether you intend to repair or sell your damaged property as-is, you can sell your property through three main options. Note that all these options have their pros and cons. Besides, what suits your property might not work for another. Therefore, choosing the best method depends on your needs, how quickly you want to sell the property, and how much profit you intend to make.
1. Selling through a real estate agent
Selling via a real estate agent is probably the most popular and widely used method. Most homeowners prefer dealing with real estate agents as they handle everything and take away the hard work of finding potential buyers for the property. Real estate agents also create a listing, the text description of the property features designed to make the house appealing.
Real estate agents also schedule and host viewings, which give potential buyers a tour of the property before making an offer. A major drawback of using agents is that you should be ready to part with some commission, approximately 3% of the final selling price. Also, selling through agents has no deadline, making it unsuitable for properties that need to be sold quickly.
If you prefer selling your storm-damaged property via estate agents, you should ensure that they have a good experience selling such properties. If the damage wasn’t extensive, estate agents might hire storm damage restoration experts to repair the minor damages before listing.
2. Selling via property auctioneer
You can also contact property auctioneers to sell your property. Here, you should agree on the minimum selling price or the reserve value of the property with the auctioneer. This means that if you don’t receive bids beyond the reserve price, your property will be sold at your set price. Therefore, you shouldn’t set your reserve price too low.
The auctioneer will create listings and schedule the auction, where prospective buyers, either online or physically, will place their bids. This is a good way of attracting several buyers who can outbid each other, increasing the selling price of the property. Like estate agents, expect to pay auctioneer fees for their services, which is often a percentage of the selling price.
3. Selling to cash property buyers
The third and probably fastest way to sell your storm-damage property is to sell to cash buyers. Cash buyers provide homeowners with a hassle and stress-free way of selling their properties. Cash buyers purchase houses in any condition, size, shape, and age, eliminating the need to repair your house before selling.
Dealing with a storm-damaged house is frustrating and overwhelming. Sellers have to deal with property damage and loss of valuables, while buyers should be extra cautious to avoid bad deals. Storms also spell bad business for real estate agents. Therefore, whether you are a property buyer, seller, or real estate agent, you should identify ways of protecting your property from future storm damage.