How to Buy a Storm Damaged Home

Hudson Valley Property Inspections has been inspecting homes and properties in the Hudson Valley of NY since 2009. During that span we have seen three “once in a lifetime” storms pound the region. The number of homes damaged has been unprecedented. Now that we are on our way to recovery from Super Storms Irene, Lee and Sandy, let’s look at how to go about buying a storm damaged home.water damage

Purchasing a house with water damage is possibly a risky investment, but knowing what precautions to take helps limit your potential loss. Water damage to a house may be caused by many different problems, including flooding, a burst pipe or a leaky roof. Other defects and hazards may be present in the home due to the water damage, such as unsound walls and mold, and the cause of the water damage needs to be examined to ensure the problem will not continue once the existing damage is addressed.

1) First, schedule a home inspection. The extent and cause of the water damage needs to be established by a professional before you consider bidding. The home inspector will assess the damage and point you in the right direction to get the estimated costs to repair the damage. Ask the inspector about the source of the water damage and if the if the problem still exists. You will receive a copy of the home inspection report.

2) Contact a contractor or remediator who has experience in water-damage repairs. Give the contractor a copy of the home inspection report. Ask the contractor about the cost of repairing the damage and cause, if applicable, for a second opinion. Have the contractor evaluate the home if possible. You need permission from the homeowner in writing if the contractor has to open up any wall areas or perform intrusive tests to check for hazards relating to water damage, like mold. Get opinions from more than one contractor to ensure the accuracy of the estimations.

3) Review the home inspection and contractor reports. Write down the total estimated cost to repair the water damage. Get the market value of the home from a real estate agent. Subtract the repair cost from the home’s market value. Your bid should be around the resulting figure, but pick a lower bid to open negotiations with the seller.
Submit a bid to the seller. Have your real estate agent prepare the bid if you are using an agent. (Recommended). Note in writing that your bid is taking the water damage into consideration.. Negotiate with the seller and make counteroffers if necessary.

4) Request a copy of the sales contract. Review the contract to ensure all the terms are correct and any contingencies you added, such as the home being able to qualify for homeowner’s insurance, are present. Contact an attorney to have the contract reviewed if you are unsure about any terms. Sign the contract when all assurances have been met.

5) Apply for a mortgage if you need financing and have not already done so. Obtain loan quotes from multiple lenders to ensure you are getting the best terms available to you. Select the lender who offers you the best terms for the mortgage you want. The U.S. Department of Housing and Urban Development offers 203(k) loans through private lenders that are specifically designed for purchase and rehabilitation, so ask each lender if the 203(k) is available.

6) Obtain homeowner’s insurance quotes. A homeowner’s insurance policy provides coverage against damage and other loss to the home. You may not be able to get a comprehensive policy until the water damage is repaired, but a more basic policy may be available in the meantime to protect your investment.

7) Close the deal. Once the mortgage papers are signed and the deed is filed in the county recorder’s office, the home is legally yours. Be aware that mold can begin to grow within 24 hrs. Begin water-damage repair as soon as possible before you move in. Waiting can make existing problems worse and add to the rehab costs.

8) After contractors have completed the repairs you should have a home inspection to confirm that the repairs have been completed and for possible air quality testing to confirm the removal of any mold.

Enjoy you new home!

Kevin Michaels, is a Home Inspector for Hudson Valley Property Inspections, llc in New York.




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