Whether it is a flood, fire, or hurricane, a damaged home is never a convenient asset to manage. If you are living in the home, not only may you be out a place to reside, but you may also be in an economic downfall.
Depending on the severity of the damage, there are a couple of options to move forward with your home. In this article we will outline the basic first steps to take immediately following the disaster or accident, then provide options for what to do next.
After the initial incident, it is imperative that you take these first steps to ensure your safety and protect your finances.
- Use caution when returning to the home – unexpected damages can cause harm.
- File with your insurance company and determine if the house is covered. It is also recommended that you document your losses with photographs.
- File with FEMA – Federal Emergency Management Agency.
- Determine if your home is in a Special Flood Hazard area.
Once you have completed these four steps, it is time to determine the future of your home. Essentially, you have three options: to sell, to fix it up then sell, or to fix it up then move back in. Each option has an array of variables that could impact your decision. Here are questions to consider to help you determine your best plan of action.
How Bad Is The Damage?
You can take a look at the outside and see the superficial damage of the home, but the truth of the destruction comes within looking at the foundation and interior of the home. To get started, you will need to hire an inspector to assess the house – they will be able to complete a full evaluation of the damages.
What Is the Financial Burden? Overhead and Profit Analysis
Once you have had the home assessed, you will need to create a budget that will allow you to identify the most responsible financial option for your future. Consider the following expenses when creating your budget:
- Contractor Fees: Have all aspects of your home inspected and solicit quotes for repairs. Seek multiple quotes to determine the most affordable option. When calculating these expenses, be sure to include the taxes!
- Tree and Shrubbery Removal, if applicable: Insurance companies typically cap their coverage.
- Temporary Living Expenses
- Transportation Costs: Consider costs of driving from your temporary home to your damaged home to meet with contractors. Also include additional costs if your temporary home is further from your daily activities.
When developing your financial assessment, be sure to have an in-depth understanding of what your insurance company will cover. All companies are different and will outline different restrictions depending on the damages and causes.
Should You Sell Your Home Damaged?
After constructing the cost analysis of fixing your home, you are now in a better position to make an educated decision on how to proceed.
Option 1: Fix up your home and move back
- You get to move back into your home.
- You will have to go through the full process of working with contractors and rehabbing the home, creating both a financial and mental burden.
- If your home is still habitable, you will be living in a damaged home temporarily.
Option 2: Fix up your home then sell it
- Potential to utilize insurance returns to fix up the basics of the home, then sell it as a “fixer-upper,” creating more value for the home than if you were to sell it as-is after the damages.
- Possibility to make a profit if the insurance claims cover all costs of the home.
- Once again, you will need to complete the rehabbing of your home, which takes both time and energy.
- The housing market could transition away from your favor, forcing you to move back into your home.
Option 3: Sell the home as-is
- Remove the hassle of working with contractors and getting your home back to the place it was – complete the legal aspects then sell as-is.
- With an influx of all-cash buyers seeking damaged homes, you have the potential to make more from selling as-is compared to rehabbing.
- No opportunity to move back into the home once the damages are repaired.
- Loss of money, depending on the offer you were delivered.
There is no quiz you can take to get an easy answer on what to do. Our best advice is to follow the first steps then consult with an expert. Have the benefit of a professional walking you through your options so that you can fully understand your potential gains and losses.
We here at Gulf State Homebuyers would be honored to get started with you. We are educated and empathetic agents who are seeking the opportunity to help those in our community. We can provide a free assessment of your home’s value and discuss what the future holds for you.