Purchasing Hurricane Impacted Properties (c) 2012 by Wayne D. Lewis, Sr.

The pictures included here demonstrate how powerful the forces of nature were when it damaged these homes in the New Orleans area after Hurricane Katrina.  Many properties that were impacted in the New Orleans area after Hurricane Katrina were damaged in varying degrees, and in many cases by flood waters, and not the Category forced winds that affected the Mississippi Gulf Coast.   The aftermath of destroyed homes left much to be desired for many homeowners.  Many homeowners chose to sell what was left of their homes, either through the government-based Road Home program or directly to the highest bidder.

Many of the sellers of the homes in New Orleans faced many challenges that they had never faced before.  As a result, not only the damages to their homes, the sellers and buyers had to quickly become knowledgeable in the selling and purchasing of flood-damaged homes.  Here are a few things that sellers and buyers had to become familiar with flood-damaged homes:

 

•  Homes that were flooded need to be gutted at least 4 or more feet above the flood line, provided that the water line was below electrical sockets;
• In some cases, where electricity was affected, whole houses had to be rewired.

• The purchase of such flooded homes, if they were going to be financed and/or insured, required a structural report from an engineering company;
• The homes had to be treated for mold after flood waters receded;
• Many gas lines flooded, often leaving water in the lines after the gas was turned back on;
• Homes that were flooded were required to be brought up to code for any renovations conducted;
• Permits were most likely required for any renovations;
• In many homes that were gutted, long term problems were revealed that would not have been ordinarily discovered:
• Termite damaged studs
• Mold
• Hidden structural craftsmanship
• Many homes that weren't already knocked off of their foundations, were torn down because they had suffered extensive damage.
• Homeowners becamse suspicious of many who called themselves contractors due to reports of scams by those pretending to be, or who were contractors and took advantage of homeowners

The above and other related issues played a great role in the marketing and selling of flood-damaged homes.  For sellers, many of whom were never able to move back into their homes, the salt in the wound were the prices that they had to settle for.  In many cases, these were homes that were already paid for, free and clear, and that had appraised much higher.  For many of those homes, where houses had to be appraised, banks did not take pre-storm value into account, let alone location.  Homes that may have sold for $300,000 was perhaps worth $150,000 or less, if not lot value.  Insurance became the real challenge in terms of finding insurance companies that were at least writing policies, when they weren't dropping policy-holders apparently due to the massive amount of damage caused by the flooding.

All of the issues associated with the sale of flood-damaged property, as Hurricane Katrina taught us had mostly to do with what more would the seller be willing to loose in the sale of the flood-damaged homes, and what risks were the buyers willing to take in order to purchase the same homes.  In Louisiana, the term  "AS IS, Waiver of Redhibition (http://www.proeducate.com/courses/static_files/docs/asisclause.PDF), was never more prominently used.  It basically meant that the buyer was responsible for the condition of the property once he/she signed off for it at closing.  That meant that regarding any problems discovered after the sale, the seller was not to be held liable.  Of course that did not apply if it could be found that seller intentionally withheld information, or covered up damage that knew about prior to sale.

For the buyer, while it may have been a flood-damaged property, the apparent, and foreseeable values were nothing short of achievable.  Many buyers, some of them first-time home buyers, saw opportunities to buy homes in areas that were apparently out of their reach before the storm, and saw a better opportunity as a result of the flood-damaged homes.  This, despite the fact that their own homes may have been damaged by the very same storm, or aftermath.

For the sellers, the challenges were from many sides.  Dealing with insurance companies, FEMA, Red Cross, looters, contractors, scam artists, the various governmental bodies, all of which took their toll on many homeowners.  Many decided: enough was enough, and decided to move on to higher ground, or totally out of the perceived flood-zone, or most likely future hurricane disaster zone.

Whatever set of circumstances flood properties presented, it was important for all real estate professionals to become quickly adept at having a working knowledge of the drawbacks and benefits of continuing to own, to sell or to buy a flood ravaged property.  In the long run, it became a benefit as well for those professionals who became a source of information for buyers and sellers alike, who during such times as was presented by Hurricane Katrina and her aftermath, were able to begin rebuilding their lives and trying to establish some form of normalcy for themselves and their families.
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