With recent spring storms in the area and the havoc they have caused to so many homeowners, I thought it would be appropriate to discuss some of the issues we are faced with in selling area homes. If the home is damaged it needs to be fixed.
When a claim is filed with an insurance company an adjuster will come out to inspect the damage caused by the storm. In many cases the homeowner has already made contact in advance with a roofing company and has a pretty good idea what to expect from the insurance adjuster’s inspection.
Currently the homes located in the area of the recent storms that are in contract to close with a new owner present a unique and urgent situation.
If there is time, the best plan of action is always to repair the damage prior to closing and have the contractor paid. If the repairs cannot be done prior to closing then you must get the buyer and seller to agree in writing prior to closing as to who will do the work, what it will cost, who will pay for it and how the insurance claim and money will be handled.
One thing to keep in mind is most insurances companies will pay a claim in two stages. As an example, when an insurance company agrees to pay for a new roof fin the amount of $10,000 and the owner has a one percent deductible then it will be paid as follows.
Replacement cost: $10,000
Less 1 percent deductible: $1,000
Less 40 percent depreciation: $4,000
First check $5,000
The $4,000 deducted for depreciation will only be paid once the new roof is installed and the insurance company has been notified and re-inspected the work. Only then will the insurance company pay the depreciated amount deducted from the first check. This means if you don’t replace it you don’t get the $4,000.
In most all cases if your home is damaged by wind or hail you should have it repaired or replaced as soon as possible. I see some homeowners collecting money from their insurance company and either doing minimum repairs or not repairing at all. If you repair less than what the insurance company believes was damaged, you may run into problems during your sale.
Gary Kuhatschek is a broker at RE/MAX Cross Country REALTORS located at 1990 Justin Rd. in Highland Village. He can be reached at 972 317-9401 or by email [email protected]