A house fire can be extremely traumatic for people who live there, which makes determining where to start when trying to sell their homes difficult. However, house fires dramatically narrow down the number of potential buyers.
Here are 2 different methods for selling your fire-damaged house. Each method has its own steps to take with both pros and cons.
Let's take a look at each option in detail and see which one best suits your needs.
Realtors say that selling your home as-is could be less expensive than repairing or renovating it. But if you want to sell your home for the most money, you (probably) need to restore it first.
You might decide for yourself which option is better. However, there are some things that you should consider before making up your mind.
Your specific circumstances and how they affect your choices will help you reach the best decision for you and your family
A house fire is an extremely terrifying experience. Realtors say that sellers are often reluctant to show houses that have experienced a major fire. They fear that it might happen again. This can really hurt your chances of selling in a hot housing climate.
If sellers have pause about selling your home, it may take longer for potential buyers to get interested. And if they don't want to buy it, then you won't be able to sell it at an acceptable profit. As the DOM increases, your home won't likely be able to fetch the listed price.
Because most buyers must borrow a large portion of the cost of buying a home, they will want to know whether the home has any major defects. You will have to prove that the cause of the problem has been fixed and that everything else is fine.
State real estate disclosure laws are becoming stricter every year. Consumers' rights have become an increasingly important part of public policy since the Great Recession.
To determine whether you can sell a property that was on fire without revealing that fact, you must first look into local laws regarding disclosure requirements for properties that were damaged by fire.
Most states require sellers to disclose any material damages they know about to buyers. These disclosures usually include things like water leaks, broken windows, and so on.
Regardless of how the form is phrased, or whether 1 is required, failing to disclose something as important as a fire could cause liability on your part. It would be best to get advice from a lawyer before taking any action.
You should disclose any previous fire damages when applying for insurance coverage.
After a house has been damaged by a major disaster, repairs may not always be easy. Besides the damage done by the actual event itself, there may also be damage due to the effects of the event, including the damage done by the fires, the damage done by the toxic fumes, and the damage done by the floodwaters.
You might be able to pay for repairs yourself (not highly recommended), but if not, you'll need to borrow money from friends or family.
You can save yourself lots of hassle by selling your house as-is if you can get the right price for it.
Most people don't know that they can sell their house without repairs before listing it. Where do you find these potential buyers?
There has been an increase in the number of people buying fixer-uppers since the housing market began recovering from its recession. However, most of these buyers are looking for homes that need minor repairs or remodel.
Those buyers typically rely on some sort of mortgage for most of their funds.
A buyer who has the experience needed to handle a situation like this will be able to buy the house and fix it up with cash.
Real estate investors specialize in buying houses that require extensive renovations or repairs. They may either perform these tasks themselves or hire contractors who they know and trust. By doing so, they can renovate houses like yours for less money.
Investors buy distressed real estate with cash and usually pay closing costs, fix them, and then sell them at a profit. They avoid the delays and uncertainty of the loan approval process when buying property in this situation.
Real estate developers are looking for properties like yours because they want to use their construction experience and resources to invest in properties at below-value prices. They want to end up with properties for which they pay less than the eventual price.
Either way, they will either fix and sell the property; or they will hold onto it for rental purposes.
If you're selling a property in poor condition, then contacting an investor is usually a good idea.
If you don't want to spend the money restoring your house, selling your house to an investor might be the way to go.
If you sell your property as-is, then the purchase will be based on its current unimproved value. You will get less for selling it than if you repair it yourself.
However, you should be careful when comparing the net amounts that you will receive from each option. Your insurance will play an important role in this comparison.
You may receive some leftover money from your insurance claim if you pay off your mortgage before selling your house. Include that money with the investor's offer when calculating your total compensation.
You may be able to get more for your house than you thought.
If you want to sell an old house that has been damaged by fire, you should look for investors who have bought similar properties before. It would be better if you could get several offers from different people.
Such a specific search may be difficult for someone who isn't familiar with the real property investment world. You might need some help as you learn.
If you're looking for someone to help you sell your house quickly, you might be led astray by people who claim that they handle houses with all kinds of damage. They may just be trying to get the most business they can.
Later, when you call them back, they may tell you that they don't purchase properties damaged by fires.
You might first be interested in finding real estate investors who buy homes near you, but before doing so, you may wish to think about the other option — fixing up your own home and then selling it. This will allow you to get market value for your home.
As you go through the process of restoring your house, there are several hurdles you will need to follow.
It's vital to get feedback from everyone early on so you don't forget anything. Also, keep people updated as you progress through the project.
Everything you do must be meticulously documented for your insurance company, lender, and any local authorities involved.
Your first contact will likely be the insurance company; they will tell you what you must do right away.
You may need to secure the property to prevent property damage. If there has been significant vandalism, you may need to turn off the power or water.
If water was used to extinguish the flames, you might have water damage. This can cause mold which may add to the costs of the repair.
A claims adjustor will be sent out to see what type of damages are involved. They will come up with a rough estimate of the total cost of the repair.
If your insurance plan includes payment for temporary housing (like a hotel), you'll need instructions on how you will get reimbursed.
If your insurance company has a list of preferred contractors and suppliers that they've used in the past, it could come in handy early on.
When an insurance claim comes through, the check will be made out to you and your lender. Both of you need to sign off on the check before you can cash it.
Understand if your insurance policy is for actual cash value (ACV) or replacement value (RV). RV is the price to repair or replace your house as it was when it was built. ACV is the replacement value less any previous damage.
The decision which coverage you choose is up to you.
Before you enter your house, you'll need to get the fire department's go-ahead (don't skip this step).. It may not be safe for anyone else to enter your house until they give their okay.
Your insurance adjustor is not the same as a home inspector. Hire an independent home inspector for any repairs needed.
There are many different types of inspectors that perform specific jobs. There are structural inspectors, electrical inspectors, etc.
Some damage caused by fires is hard to see. You might need to call an expert for help.
Fire restoration companies specialize in repairing fire-damaged properties. They're more familiar with fire-based damages and repair methods than a general contractor would be.
A person who works alone may make mistakes. But if he does his job correctly, he can be trusted. In order to avoid any unnecessary problems, we suggest you hire a professional company with a general contractor's license to do the job. They will care for everything, so you won't have to worry about anything.
A good restoration contractor can be a huge asset when dealing with your insurer because they're familiar with the ins and outs of communicating with them.
It's important to know whether the contractor you're considering hiring is a GC before you hire them. You may want to ask them if they charge an additional cost for their services.
Depending on the extent and nature of the damage caused by the fire, the costs associated with repairing it may vary.
Homes vary widely in their susceptibility to firefighting efforts and their level of smoky conditions.
Some repair estimates for fire damage vary from ($4,000-$35,000).
According to RealtyTrac, in 2016, the average cost of a fire-damaged home was ($116,000).
According to the National Fire Protection Association, in 2015, there were an estimated 365,500 residential fires in the United States.
Inspecting your house for termites doesn't count as an inspection. It costs between ($500-$700) per inspection.
If your insurer requires you to insure your house, that might mean you need to pay for things like installing a fence around the yard or boarding up broken windows.
You'll need to provide potential buyers with a disclosure form outlining the damage.
It's important to be honest with potential buyers about the damage your home has sustained.