Buying a flooded home….. appraisal?
March 19th, 2010 | by admin |About 2 weeks ago we made an offer on a house, less than the appraisal, and it was accepted. Last week the whole town the house was in flooded. This house is not on a flood plain, in Iowa everywhere got flooded, but ended up with about 4 feet of water in the half finished basement. The current owners are in the process of gutting the whole basement, ceiling included even though it wasn’t touched by water. Replacing furnace and water heater as well. I’ve done research on clean up and we will be involved in supervising that so I’m not as concerned about that. I am concerned with property value however. We are having another appraisal done when the repairs are made, how big of a difference will we see?
it seems…..the seller has to maintain the house in the same condition, as when you placed the bid……this would be considered a repair, and not an improvement. I wouldnt think this would affect much……………..
4 Responses to “Buying a flooded home….. appraisal?”
By Jeromy W on Mar 19, 2010 | Reply
it’s hard to say, if everything is new, you might get a slight bump up in the appraisal, but what you may want to talk to your bank about is an inspection. When there are disasters like the one in Iowa, the banks are put on alert, and depending on the damage and disaster, the bank may possibly want a special FEMA inspector out to the home to look over it. My guess would be that this transaction has already been tagged as such, definately contact the lender as I do not think the appraisal will be enough to proceed, the home will have to be inspected
References :
7 years title examiner, licensed loan officer
By DennistheMenace on Mar 19, 2010 | Reply
it seems…..the seller has to maintain the house in the same condition, as when you placed the bid……this would be considered a repair, and not an improvement. I wouldnt think this would affect much……………..
References :
By Brandon H on Mar 19, 2010 | Reply
Hi, I’m in a very similar situation where we made an offer in a small town just outside CR, IA a week later the bank accepted, the following week the house flooded. The unfinished basement had approximately 3 feet of water in it and the seller (bank) will be replacing the furnace, water tank, and insulation. I’m not so concerned about the repairs however I am concerned that this will push our closing out several weeks and what the long term implications of flooding may be. We can pull out of the sale if we wish but I want to make an informed decision.
Will the home values in this little town decline because of the flooding? Will I need to disclose the flooding on the disclosure when we sell? Are there any long term issues with foundations with flooding? This home was in a newer subdivision that was in a FEMA zone C which is not a flood plane. Will this area be rezoned? Will I be required to have flood insurance? Will our insurance rates be affordable? The whole situation makes me a little nervous but we love the town and the home and looked for 6 months before we found this one…
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By Walkaway_Joe on Mar 19, 2010 | Reply
The effects of the flood on the neighborhood property values will be learned in the future when people start selling these houses with prior flood experience. For now, this is just a repair job and shouldn’t really change the first appraisal in the short term. Your mortgage lender may have some special provisions regarding a house with recent flood damage, so best to let them know what’s going on. The sellers are correct to repair everything before you take possession. Most lenders want their collateral to be in proper repair and decent condition before they will make the loan.
Getting back to value, because your neighborhood was not in a designated flood plain it is unknown how this will affect the future sale prices. Buyers may be hesitant to pay full price on a home that has been in a flood because of the residual mold risk, if anything. lt will be interesting to see if FEMA will designate your neighborhood in a flood plain next time the maps are updated. That WILL affect your value!
References :
Appraiser 10+ years