Hurricane: Pain or Gain?

[Mark Manship]

Well, it looks like Florida won't get off that easy as we reach the last few months of hurricane season. With that being said, I'm wondering if anyone has had any experience closing deals (either selling or buying) during a potential strike - more specifically, has it resulted in any changes to your pricing, inspection periods, or contingencies? I understand there are typically clauses providing coverage to buyers during catastrophic events (forces of nature), but was interested in hearing how it has or would play out. We're currently set to close on a sale on September 19th in Niceville and pick up another property on the 11th of October in Pensacola; with Irma and José on their way, we're anxious about how it will impact the deals (either positively or negatively).

[Nina Ibrahimbegovic]

Your insurance agent probably won't bind the policy , so closing might be delayed.

[Kurt Traynor]

I'm still a go for a closing on the 29th. Inspection was today and not a mention of Irma. Inspector was a robot!!

[Heather O.]

Interesting perspective - I like your open-mindedness to find the silver lining on the Hurricane clouds!

[Yiftach Ilyov]

I asked myself the same question today and I did a small research- Harvey created some opportunities for investors in Texas . If I stand correct they predicting 1-2 years for the RE market to stand back on his feet and around 10 billion dollar in mortgages that people gonna have problem to pay now= tax delinquents = opportunities .

I'm in the same boat as you, closing on the 15th and no insurance agency want to insure me. Most of them have a cease on FL. No insurance = no lender = no deal .
If you find an insurance agency please let me know !

My assumption for the impact - depending on how bad it's gonna hit.
Even though Tampa is more prepared for storms than Texas(Texas has only 15% of owners insuring for flood damage ! ), there still will be opportunities created by home owners with small equity and a destroyed houses that will want to walk away. One men's trash is another men's treasure😊.
Also, places that gonna be severely hit will have a hold on new constructions because a. People will hold on purchasing and local investors will hold on putting money and recalculating and b. Contractors will push
New constructions and focus on reconstruction of the ruins.

People don't make big life decisions in traumatic times and if they do it's usually mistakes that create more opportunities

[Mark Manship]

Agh - I think my post may have come off as a little insensitive; I'm more concerned about finding additional information on the delays/re-inspections/costs associated with extended contract periods rather than making a buck at someone expense.

Given that we may have to delay our closing, I'm curious if anyone has experienced similar scenarios where they were required to re-inspect, re-appraise, etc. following a hurricane strike.

[Mark Manship]

@Yiftach Ilyov thanks for the reply - I hadn't even thought about the lending dependence on insurance...urg...

I'll have to reach out to my broker and see what we can do to get quotes before Irma strikes, and/or determine how long it will take to get a quote.

[Fred Heller]

I'm assuming you're the buyer. If you're financing, this will result in a delay in closing if a disaster declaration is made for the area. The bank will require an additional inspection to assess any possible damage to the property.

I have a client who is in escrow on a 4-plex. We were literally three days away from closing when Harvey hit. Now Wells Fargo has frozen the closing until they can get an inspector to check for damage. We have no idea when this inspection will take place. It could be a few days. It could be weeks.

[Arianne L.]

@Mark Manship Insurance will be the biggest issue. No one will write / bind insurance policies while there is a named storm (and obviously a cat 5 hurricane). 

This isn't just for financed purchases. We have a few we are closing on next week for cash and we have informed the seller that we won't be able to close until insurance companies start writing policies again. The seller has a bound insurance policy. If the storm wipes the house out he/she is fine since the house is covered. If we close without insurance and the hurricane wipes it out... not good.

I'm an agent and so far 5+ different agents have said that the lender is refusing to close due to the hurricane. This doesn't make sense to me cause the agents said the insurance policies were bound before cutoff (some insurers were still able to write policies earlier today).

With your closings on Sept 19th and 11th of Oct, Irma should have passed. Hopefully we don't get any more.

[Mark Manship]

Arianne L. , Fred, thanks! To continue the thought, though a slightly negative one...

Has anyone ever had to recover from a total loss (either as a seller or buyer)? Would you rather take the insurance money and "run" (and sell the land)? Build new construction?

On the buying side, would you stick with the deal? What would you rather the seller do?

[Jean Taveras]

If you're using the Purchase contract As-is or FAR BAR, theres is a section in the contract that explains this, the section is called "Force Majeure". It explains in detail what happens in the event theres a hurricane, flood, fire etc. 

[Jean Taveras]

Im currently handling both sides of a deal, buyer is an investor and the seller is a primary owner and the investor wants to buy cash for a price not too reasonable to the seller but acceptable. The sellers fear is if the home were to have severe damage and the insurance would cover the damage and replace roof and kitchen then they would be locked into a undesirable contract and now the home is worth more. The investor of course knows this and wants to lock it up and if in the event the hurricane comes the insurance will cover the home and bring it back to a newer state and he will have a good deal. The seller is thinking of just holding until after hurricane and going from there. FYI usually insurance adjusters and repair doesn't happen as quickly as we all hope it does especially if more homes in the area were affected...homes will be left abandoned with unlivable conditions until home is repaired. Its a tough spot.

[Jean Taveras]

I may add, this can be an opportunity for out of state investors to buy out distressed properties cash and have the insurance handle the repairs etc. But, for unfortunately for those owners it could be the worst thing that can happen to them. 

[Matt Jones]

I am closing on a rental in Pensacola this Friday 9/8 because I bound the insurance policy at the end of last week.  Based on your closing dates it is unlikely that either current storm affects your closing unless they hit and cause damage to the property you are buying.  If that happens the closing status will be determined by the provisions in your contract.  If Jose really moves slow it could keep you from getting insurance on the 9/19 closing. 

[Account Closed]

Contract should specifically spell out what happens in the event of the property is damaged during contract .  Until then , it may be a non issue or if there is damage, you address it at the time.  You really just have to wait and see what happens.  We bought a property in TX while it got with a hurricane and agreed to received the proceeds of the claim.  There were a lot of question marks surrounding the issue but we were able to work through  it.