What to do when buying a house that just had a fire?

Question

I am in contract to purchase a house that recently had a fire, but most of the studs are salvageable, however.. all bathrooms were removed, all flooring was removed, all HVAC needs replaced, ALL plumbing and electrical also needs replaced, along with some insulation, windows, and other misc repairs.( the roof is still good miraculously ) Some additional facts that may help your response are.. the fire happened about a year ago, but just recently came on the market as a foreclosure. The insurance claim was denied due to arson.. I spoke with the fire Marshall and I am confused on what questions to even ask.. I am a licensed realtor and I have a lot of clients who do this all the time, so I have a decent knowledge on the remodeling process and costs but I have never really done a flip that needed more than a just little TLC, so I am ignorant in where to start on the due diligence for a situation like this.. some of my questions are listed below but I would love any additional advice and opinions. Thanks!

-Is there any specific documentation that I should request for the damage of the property, if so- who from?

-What additional inspections and or tests would you have done aside from the basic home inspection, termite inspection, and structural engineer inspection? (property is on public utilities, including gas)

-What permits will need to be pulled and when? ( I know this is all dependent upon the location, but looking for a general idea)

-Who would determine which studs are "salvageable" ? (I read on another posts that if the fire damage is deeper than 1/8 inch then it needs to be replaced but who confirms that and what is the process of having that done)

-Also, how much extra do you pay to get rid of the smell (i.e., Kilz, Ozone Generator, cleaning solutions, etc.)?

-Dumb question, but I assume I will not be able to obtain adequate insurance until the damage has been repaired? or is there a specific type of insurance that I should still carry through the remodel?

Jeremy VanDelinder · Answer

Garrett,Good questions! You are thinking in through well. There are a lot of things to think about with fire-damaged properties. @Caleb Jordan is right that you local building inspector will be the ultimate decision-maker on some of these question. It's a good idea to start the project by doing a walk-through with the inspector to get an understanding of what he expects. Here are some general observations:-Is there any specific documentation that I should request for the damage of the property, if so- who from? You can if you want, but my last project was a burned-out house that had been abandoned for over 10 years--we couldn't even find a fire report and it didn't really bother me. -What additional inspections and or tests would you have done aside from the basic home inspection, termite inspection, and structural engineer inspection? (property is on public utilities, including gas)You pretty much covered it--the biggest ones are structural engineer report or even just reports from city inspections (if applicable) Just document like crazy and get expert reports along the way. When you disclose the fire to the buyer give them all that info so its clear to them you didn't take shortcuts.-What permits will need to be pulled and when?Can't speak to your area, but in most places I'm familiar with, you will need to pull a permit for a full remodel. Just take it to the city inspection office and ask them. My advice: don't try to slide by without it. As I referred to above, the city inspector will actually help by adding credibility to your remodel. -Who would determine which studs are "salvageable" ? (I read on another posts that if the fire damage is deeper than 1/8 inch then it needs to be replaced but who confirms that and what is the process of having that done) -Also, how much extra do you pay to get rid of the smell (i.e., Kilz, Ozone Generator, cleaning solutions, etc.)?The 1/8 inch rule is a good rule of thumb, however--as mentioned earlier--let the city inspector make that call. He is the one that you have to make happy. My approach--if there is any charring, replace them. Studs and roof decking with smoke will need to be sealed (Kilz, etc.) so that the toxins and smell from the smoke don't leak back into the house or attic.You need to get either a contractor experienced in fire-damage and/or a remediation company--the will help pin down these kinds of things.-Dumb question, but I assume I will not be able to obtain adequate insurance until the damage has been repaired? or is there a specific type of insurance that I should still carry through the remodel?If your regular insurance company won't write a policy (State Farm rejected my last one), pick up a "builder's risk" policy on it to cover you. Hope this helps. Let me know how it goes. By the way. If you want to see the final product on my most recent fire-damaged flip, you can see it on this HGTV episode of "House Hunters:" https://www.dailymotion.com/video/x6ujouf (Its the first one on the episode.)

Garrett Addington · Answer

I didn't get it unfortunately. Went $15k over asking price and still didn't get it. Thanks for following up!

Jeremy VanDelinder · Answer

@Garrett Addington did you get it under contract? How is the deal looking?

Garrett Addington · Answer

Thank you @Jeremy VanDelinder, I really appreciate the helpful feedback! Very impressive flip on HGTV by the way.

Garrett Addington · Answer

Thanks for the quick response! It will be a cash purchase but I will certainly double check to see if there are any loan guidelines that would prevent funding on a repaired fire damaged house..

Caleb Jordan · Answer

I don't have too much to give you. lots of these questions will be the local city codes. Try calling a local fire or smoke restoration company they may know a little about local codes and also put you in contact with someone who can answer more questions. If your financing the house the lender should be able to tell you what is needed for them to fund it. I would also check into what fha regulations are for a house that had a fire, since fha is most strigent it should cover all your potential end buyers and any snags fire damage remediation can cause for future conventional loans.