Selling Your House After a Natural Disaster

When your home is on the market when a natural disaster hits, or you want to put it on the market right after, you probably have questions. Selling your house after damage from a hurricane, flood, or tornado isn't ideal, but it can be done.

What does a homeowner do first after a natural disaster?

Whether you decide to sell, repair, or renovate and stay put, one of the first calls you make should be to your insurance company. After a natural disaster, your insurance company will be processing a lot of claims, and you want to be at the top of the list. Don't go back to your house if it isn't safe, but as soon as you're told it is, go back and take a lot of pictures, documenting as much as you can. 

Even though you may be stressed and unsure what comes next, keep all your receipts and continue to document anything you do to fix your house. That information will come in handy as you file insurance claims and file with FEMA.

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How much of the storm damage should I repair?

At a minimum, you should do what you can to make your home safe, unless it's been condemned, of course. For people planning to stay in their homes, storm or flood damage may force them to renovate before they planned on it, but the renovations might be just what they wanted? Maybe you were ready to move, but a hurricane makes you experience your very own HGTV-style "Love It or List It" moment. Disaster or not, you wouldn't be the first homeowner who fixed a house up before putting it on the market only to decide to stay when the renovations proved too tempting. 

If you know you won't stay, don't make any drastic changes because the new owners may not share your taste in remodeling. make sure any changes you undertake have a good chance of increasing the value of your home to a buyer.

How will a natural disaster affect my property value?

If you already live in a high-risk area for natural disasters like earthquakes, your property value may dip slightly after the event but should rebound. In areas where a hurricane, earthquake, or other natural disaster is more surprising, buyers may lose enthusiasm in the wake of a storm. Another reason you can expect it to take longer to sell is that mortgage lending will move a little slower than usual as the area is assessed. Your house will still have to pass inspection and lenders may be more rigorous.

If the house is storm damaged during escrow, who's on the hook for repairs?

This is where real estate professionals and attorneys are worth every penny. Your contract should make this answer easy. In many cases, if the damage will cost less than five percent of the sale price to repair, the sale goes through as expected. But after a natural disaster, the damage is often much greater. For more costly damage, a buyer can usually opt out of the sale. If you need to move, you may be able to negotiate with your buyer pending a new inspection. This is one reason it's even more important to file your claims as soon as you can. The sooner you have a check from the insurance company, the sooner you can know exactly what you're looking at.

Should we take our home off the market after a natural disaster?

If you can? Sure. Taking your home off the market isn't always an option, though. Maybe you already have your next home under contract, or your scheduled to start a job in a new city in a month. There are a lot of reasons you might need to sell your home now, and it is still possible. Enlist all the help you can get: hire an experienced real estate agent, stay in close contact with your insurance agent, and ask as many questions as you can. Be prepared to be a little disappointed in the sale price and get ready to devote a fair amount of time to your home, whether that's filing claims, negotiating with a buyer, or working with contractors to get the work done in a timely manner. It won't be easy, but it can be done.