Flooded Home: Selling or Fixing

It will be incredibly difficult dealing with a flooded home. However, it is important to act quickly to protect your possessions and your financial future. It’s normal to think, “Should we repair it?” Or, would it make more sense to sell it? Let’s dive into the details so you can make an informed decision.

Photo of homes in a community that was flooded
Here we see a flooded home surrounded by others that have experienced damage. | Photo by Rachel Claire

The financial cost of restoring a house after it has been damaged by water is often more important than the emotional toll. Did you have flood insurance? Your insurance may be either through a private carrier or directly through FEMA depending on where your property is on the flood map. What’s the difference? It is evident that there is a difference.

Flood Claims

All those friendly and funny insurance commercials that are trying to get your premiums up when times are good don’t mention the horrors of flooding damage claims.

History has shown, especially after Hurricane Katrina, that claims should have been covered by many of the claims adjusters at big carriers like State Farm.

Two former State Farm adjusters have come forward and turned over thousands of pages of documents, claiming that the company has deliberately denied valid claims.

Source: NPR, November 7, 2006

This is a shameful situation that only adds to the homeowner’s already difficult situation.

Not every private insurance agent or carrier denies legitimate claims. Many will work with you and provide insurance checks to help you fix your property. However, just because they are eligible to receive reimbursement does not mean that every homeowner wants to fix the property.

Everyone has this thought in their heads. What is the likelihood of your area being flooded again? This can be difficult to predict.

Your home could be in a floodplain of 500 years or outside of a flood zone. However, this does not guarantee or provide any guarantees about what you can expect.

Sell to a Home Buyer in Your Neighborhood  

If you are a homeowner who is able to file a successful insurance claim and has the ability to repair your home but does not wish to live there, it may be worth considering selling your property. It’s logical because most homeowners assume that it is difficult to find a buyer for a home with a damaged foundation. From a traditional perspective of real estate, this is quite accurate.

These are the steps to take to make your property more appealing to buyers.

  1. Check that you have renovated the plumbing
    It is crucial to get a professional to inspect the plumbing system and make sure that there are no potential problems for buyers. This is especially important if you live in an older house and have not done maintenance to the plumbing system.
  2. Have your Home Inspected For Mold
    Mold can quickly detract from any property’s value, so it is crucial that your home be inspected for any signs of mold. Mold remediation with proper documentation is crucial for resale.
  3. Flood-Proof the House
    A buyer will want to see proof that you have taken steps to make it less likely for a flood to occur again. This could mean a complete renovation of windows and doors or better grading to elevate.

Many homebuyers want to purchase a house that they can move in immediately, but don’t have enough money or the desire to renovate an entire flooded home.

Is it always a good idea to fix a flood-damaged home before selling?

All that being said, it is not always wise to fix a flood-damaged house in the hope of selling it. Why? This is what we’ve observed over the years and why we warn people against this approach.

Every house buyer will look at your flood history. No matter how beautiful the property is, this will happen regardless of how well it looks at the open house. Some areas have been known to repel home buyers if there is only one flood record, while others are able to withstand three floods.

This information is essential before you spend the effort to fix your flood-damaged home in order to sell it. Many people make the error of not knowing their exit strategy when required to disclose flood information in a listing.

This is the bottom line. Before you decide to restore your flood-damaged home for resale, do your research. You might find that there are better options. This is why often consider selling their property quickly for cash to avoid having to do renovations. In the next section, we will talk more about the cash buyer option.

File Flood Insurance Through FEMA

FEMA lets homeowners purchase flood insurance through their network if the property is in a floodplain. Different definitions of risk exist, but this will simplify things. Your home could be in a flood zone that is 100 years or 500 years old. These estimates estimate the probability and frequency of potentially catastrophic future events.

FEMA may not be able to insure property in high-risk flood zones. However, most construction is prohibited in these areas. You can compare your risk to base flood elevation with several interactive tools.

This is the main takeaway. Your claim will be easier if your property is located in a flood zone. Why? These budgets are federally funded and do not need to be approved or endorsed by claims representatives or private adjusters.

Although flooding is bad news, it is good to know that your insurance is FEMA-backed.

The Perils of Underinsurance 

You may also find that your property insurance was not properly done because of an oversight. Many property owners have discovered the hard way that floodwater is not usually covered by homeowners’ insurance policies.

Underinsurance is the most dangerous factor after the water recedes. According to USA Today, only 2 out of 10 people were covered by hurricane Harvey.

Even if the property is considered insurable but is located in a flood-prone area, it might not be possible to pay the premium.

People who do not live in high-risk flood zones are frustrated by this because they are contributing to the financial costs of climate change and expanding FEMA flood maps. Private insurance companies must pay their claims. They do this by compensating losses with higher premiums.

Flood-prone homes are often self-insured. The cost of repairing a home may be more than you can afford. In addition, borrowing enough money may be impossible or unrealistic. We now have one of the best options for flood victims to help them make a decision about whether or not to move forward. What are the chances of finding a buyer?

Who can buy a house with flood damage?

There are options available to assist those who have been through this kind of hardship. There are alternatives to selling the property or staying put with the possibility of flooding.

Imagine if an investor is willing to take on flood risk. This is an option that could solve your problem and is worth considering. Continue reading to find out how to quickly and affordably sell a flood-damaged house.

How to Sell Your House

There are a few ways you can sell your house quickly. 

  1. There are investors that buy these types of distressed properties for cash.  They will conduct a quick inspection of the property. They have the resources and vendors who can make all the necessary repairs. The good news for the sellers is that they get the cash quickly from the sale. And since these buyers pay in cash, it’s usually a very quick close. 
  2. There are real estate agents who have a list of buyers that purchase properties that are flooded or are distressed in some way. It may be up to you to locate an agent who can assist you throughout this process. An experienced agent (criteria #2 in importance) can make your life much easier; especially if you have a flooded home. 
  3. Contact an iBuyer. Not sure what an iBuyer is?  It’s an instant buyer who uses an algorithm to determine the price of your home. One of the biggest ones is OpenDoor. Many buyers have used their services, especially in the last 2 years. 

What are you going to do next?

You probably realize that selling your flood-damaged house is more than one option. Although it’s true that this is a difficult task, we can help you.

It can be difficult to know how to sell your house after it has been flooded. This is because of the emotional trauma that comes with it. A company that specializes in buying houses after flooding or other severe water damage is your best option. This will ensure the highest value and minimize stress.

This can be more difficult if you are behind on your mortgage payments and are looking to sell the house before it faces foreclosure. Potential clients often ask us questions like “Can I sell my flood-damaged home before the bank forecloses?”. We will help you understand your options and the consequences, and guide you to the best path.

Many properties have experienced water damage. Some flooded homes have almost no opportunity for repair. A lot depends on your situation. But know that it may still be possible to sell your home after a flood.

Tre Pryor, Realtor

Tre Pryor is the leading real estate expert in the city of Louisville. He is a multi-million dollar producer and consistently ranks in the top 1% of Louisville Realtors for homes sold. Tre Pryor has the highest possible rating—5.0 stars on Google—by his clients and is routinely interviewed by the local NBC news. Tre Pryor is a member of the RE/MAX Hall of Fame.