SELLING A SINKHOLE HOME? BUYING ONE? 3 THINGS TO KNOW ABOUT SINKHOLE HOMES (according to Pinky)!
CAN YOU SELL A SINKHOLE HOME?
THINKING ABOUT BUYING ONE?
PINKY’S 3 THINGS TO KNOW ON THE RESALE OF SINKHOLE HOMES!
Written by: Sue Benson aka Pink Lady of Real Estate
No doubt, you saw and heard about the giant, catastrophic, sinkhole we had here in Hernando County over the summer. Obviously, this is not normal! However, as we all know, we do have sinkholes in this town. I feel the most important thing I can do is educate others on their existence and what it means to people moving into the area. It’s, also, important to talk about what they mean to your home value.
In Hernando County, you can’t go down the road without noticing the cement trucks parked in front of homes. If you already live in the area, I’m sure you know the ones on your street that have been repaired and the ones that have not. You can, also, access this information on the Hernando County Property Appraiser website (www.hernandocountygis-fl.us). Yes, it does show up there, and now the site indicates if the sinkhole is repaired or unrepaired with little colorful triangles to highlight the differences. So just how does this affect selling your home?
First, you cannot hide if you have had a sinkhole. As I stated, it is public record, and when selling your home you are obligated by law to disclose any and all defects on the property, which includes sinkholes. (Side note, it’s better to be upfront about it now, because you don’t want your neighbors to be the ones giving out the news later, and trust me they will say something, as they should.)
Second, if you have had the home repaired both interior and exterior, GOOD FOR YOU. You MUST keep all documentation on file. The engineer report, the repairs performed on the home, and any information regarding your insurance pay out on the property. This will be extremely helpful when it comes time to put it on the market, and it’s going to help your resale value. Right now (2014), repaired sinkhole homes still take a slight hit when they are up for resale. Roughly, it’s about ten percent less the value* assessed for property. So if you home is worth $100,000, it’s going to take 10% right off the top and it’s now worth about $90,000. Part of the reason for this is because even though they are repaired most big banks WILL NOT do mortgages on the properties. It can, also, be challenging, although not impossible, to get homeowners insurance. Thus, the reason the paperwork is so crucial and must be kept in a safe place. (Read between the lines and make copies and put in a safe deposit box, etc.)
Third, now let’s talk unrepaired sinkhole homes. Whether you believe it to be right or wrong, people did it. They took the payout for the repairs on the sinkhole from their insurance company and then never repaired the home. These homes will not sell for more than 50%-60% of their value*, most likely. It’s better if they have the engineer report still on file, but they still won’t get top dollar. So if the home is accessed at $100,000, these homeowners will be lucky if they get $50,000 for their home. (Please don’t shoot the messenger, I just tell it like it is.) Here’s the reason why, obviously the property is unsecured, so you won’t get any homeowners insurance, and NO BANK will give a mortgage on the property, so it has to be cash deal. (If there is a bank that does unrepaired sinkhole mortgages please let me know.) These homes become a bigger problem when they are foreclosed on because usually the previous homeowner has taken off with the engineer report in hand, and the bank is left with nothing.
But in the end I really feel the best thing to do is get educated on the topic of sinkholes, repaired or unrepaired. You wouldn’t move to California without finding out about earthquakes would you? Every area has their issues to overcome. Research, and educate yourself.
Here’s a recent interview I did with a Florida based sinkhole remediation company based in Brooksville, Florida, LRE. We spoke about what you should know about sinkholes.
*These percentages are based on the property values in 2014 when this blog was written, they can vary from area to area and situation to situation.
This is not legal advice, nor can I give you legal advice concerning your sinkhole situation. In fact, if you are working with a Realtor already I can’t even provide you with insight, it’s unethical for a Realtor to provide information to another real estate agents customer.
Please send me an email at PinkyKnowsNaples.com
You can find more tips, tricks and blogs on my website www.PinkLadyOfRealEstate.com
