A Guide To Selling a House that has Water Damage

Did you recently find out that your property has leaking pipes or some type of flooding that has caused damage to your home?

Water has a way of finding its way through cracks in walls, and even seeping through floors.  

Do you want to sell your house but you are not sure how to di it the fastest and most efficient way? Our guide will help you get through this entire process.

• Over 20% of all water damage insurance claims are related to home sales (Source: Insurance Information Institute)
• Over 50% of home buyers are unaware of the potential for water damage when purchasing a home (Source: National Association of Realtors)
•  Over 30% of home buyers who discover water damage after purchasing a home are unable to recover the cost of repairs (Source: National Association of Realtors)

This guide contains information to help you sell a house that has water damage, such as black mold or water stained ceilings. 

1) Sell to a Real Estate Investor

You will find signs such as “We Buy Ugly Houses”, in every American city. Ever wonder who is behind these signs and how they are able to buy homes that have been damaged?

Many homeowners have to sell their houses quickly due to divorce or other difficult circumstances. 

While some homeowners believe they can sell their house without major repairs if they don’t have the money, most buyers are looking for a beautiful home.

There are always plenty of real estate listings that have water damage!

Many investors in real estate own house buying companies to help those who are facing financial difficulties such as this. 

These home investors can buy any properties in any condition for cash, and they do so with quick and easy real estate transactions. Seller don’t have to deal with a repair, or issues with the property like replacing the flooring. It is sold “as-is”.

How to find the right home buyer

The tools that legitimate house buyers use to make the cash offer are sophisticated and based on current market trends.  Investors without any integrity  make low-ball offers to try and take advantage of a seller who is stressed.

Some house buyers mistakenly call themselves professional investors, even though they are not ethical in their business practices. Before you ask for an offer, find out the integrity of these home buying companies.

Request cash offers from reputable companies. You may not receive the best offer if you sell your home to the first investor who offers you a deal. Different home investors may value your house differently. Compare cash offers from different companies and shop around.

Accepting an offer from a home investor is a sign that you are satisfied with their terms and confident in their reputation.

Pros of Selling to a cash investor

A typical buyer will make an offer and move in to your home, making the transaction easy. But  if they find black mold due to water damage, the buyer will most likely cancel the contract.

Investors do not have an emotional stake in your property. Investors will only offer what it will cost to fix and resell your home at a profit.

 Investors won’t leave if mold is found or other issues including the foundation. They will deduct the cost of mold remediation in their cash offer.

You don’t need to worry about expensive repairs if your house is damaged by water. No matter the condition of your house, you can sell it “as-is” and not ev. If your buyer is an investor, selling properties won’t be difficult.

If want cash quickly,  selling your house to a company is a good option and can be less stressful and leave you with fewer worries. It is easy to sell quickly and you get paid in cash. 

The investor will be in charge of the renovation of the property.

Homebuyers often include their costs in their cash offer. 

There are no realtor fees. You won’t have to pay any closing costs, nor deal with cleaning the home! Closing is fast and simple with minimal paperwork.

Selling for a Cash Offer: the drawbacks

The perfect solution for the right homeowner is a quick sale to a property investor. This convenience comes with a cost.

 Investors will always offer less than the market value.

This is a common practice for getting paid in cash and receiving it quickly. There are many benefits for those who want to sell their house fast and get paid in cash . 

If you don’t want to cut the price, then you should consider traditional methods of selling your house;  like listing it on MLS.

However, you should confirm that the company is legitimate before you sell to a cash buyer. 

Scammers are common in the real estate industry, and they prey on those who don’t do their research. Violations do occur in the real estate industry.

So take the necessary steps to find out what type of buyer you are dealing with.

2) Sell with an agent

Real estate agents facilitate negotiations between potential buyers and you for your home. A typical real estate transaction involves both you and your buyer. Both agents get paid when the house closes. 

This motivates them to work together to bring the buyer and you together.

How to choose the right Realtor

The right realtor will have an idea of the best offer you can receive on your house. The local housing market should be well understood by an experienced realtor. 

Savy real estate agents can help you determine a price that will attract buyers quickly, especially you are looking to get an offer fast! Prices will be determined by many factors including the neighborhood and schools.

Benefits of selling with a realtor

An experienced real estate agent can offer advice and help you determine a fair asking price for your house, taking into account its condition, market demand, and other factors. 

You may even make more than an “for sale by owner” or investor cash sale transaction. You might get offers that are higher than your asking price in a hot market. In a slower market it may take you months to get the best possible price for your property.

Traditional sales will make your home more visible to potential buyers by having it listed on a local Multiple Listing Service. The MLS is only available to licensed agents, which is a great advantage.

Buyers often demand unreasonable things before closing. For example, home inspectors may find faulty wiring or leaks and recommend that these be repaired. 

However, the buyer insists on having the whole house rewired and wants a new roof! The source of the leak may be hard to find!

These demands are one reason why its good to have agents assisting you throughout the sale. 

Buyers who are looking for homes to live in typically won’t purchase houses with water damage. It is too expensive and requires too much effort.

Selling with a Realtor has its drawbacks 

Your realtor may ask you to stage your home for the highest possible price.  Before listing your house, you will have to make repairs and other potential upgrades. 

Showings can be a pain for sellers. Each time a buyer wants to view the house, you will be asked to leave.

Honestly, it’s a small price to pay to sell your property.

It could take months to sell homes. If your asking price is too high or your neighborhood isn’t hot, you may find your home sitting on the market longer than you like.

That means it could be time-consuming and a high DOM (days on market) can turn off many people!

In traditional sales, the seller will pay the majority of the fees.

The fees you pay for your home sale will be split between both the seller’s agent and buyer’s agent. 

They may charge you anywhere from 5% to 6 percent.  It’s possible in a hot market, you can get the buyer to pay your closing costs!

However, both agent fees  and other (often hidden) fees will be paid by you; the seller.

You will need to fix any water damage that you are aware of before closing. 

Before the sale is complete, you will need to address any other issues discovered during the home inspection. 

It’s possible the buyer can ask for price concessions or walk away from the contract.

Buyers will want to cancel the contract home inspectors mention “black mold” or there is growth of unknown substances.

3) For sale by owner

Signs that say “For Sale By Owner” are commonplace signs in America. The asking price is set by the seller. The seller handles all advertising, showings and other processes until the closing. 

Several third-party websites can help the seller with advertising for a fee. The seller can also use real estate agents in a limited capacity. Discount brokers will prepare all the paperwork on your home sale for a smaller fee!

Benefits of selling on your own

Selling your house by yourself has the greatest advantage: you can save money. FSBO transactions reduce the commission so you have a greater chance of making more money by selling your house yourself. This means you need to do your research on the local realty market and know all details in order to determine the right price.

Again you will need to know your neighborhood and the market. If you price your house too high it will sit.

Selling on your own has its drawbacks

Buyers are very limited in their willingness to buy real estate with water damage. Sometimes the various causes of leaks can be hard to pin down. It may be hard to get an offer on your home!   This means that your house could sit on the market without a buyer. 

 You should disclose everything; including past problems to any potential buyers. That is what all real estate agents will tell you.

You could face legal action 

You need to be sure that you have the correct disclosure and release papers for the buyer. It is important to determine what forms are required and where they can be found.

It’s crucial to present to the buyer that the price you are offering matches the condition of the house. Selling a house with mold can be difficult. Mold has the potential to scare away most people, and the extent of damage might be unknown. For example, it might be hard to identify if mold is in the drywall! 

It is possible to remediate mold, but it must also be addressed. If you don’t know how to negotiate and show that past water damage is not a problem, it will be difficult for you to convince a  buyer that there is no risk of mold in the future.

Selling yourself may not be a good idea. Some information shows that FSBO homes sell for less than property that are sold through real estate agents. . 

A seller may not know how to price a house that has water damage. A price set above the market will surely scare away buyers. You could also sell your house quickly, only to find out later you could have gotten more!

Just like a regular home sale, staging your home will help you get the best possible offer.  It can be hard to for many sellers, when buyers present a low ball offers and complain about a repair that is needed.

In the end, length of time it takes to sell a house with flood damage will depend on the damage, the location (neighborhood) of the property, and the current market. 

Types of flooding

Homes can flood from disasters like hurricanes. Property can incur flood damage from other means like broken pipes.

These two scenarios have one thing in common: water damages the home.  Groundwater flooding is when water enters a home because it cannot drain properly.

Water entering a house above ground level is the second type of flood event. This can be caused either by a natural disaster, or mechanical failure. A roof that has been blown away by windstorms can lead to flooding of the entire property.

A mechanical failure in the home can be devastating. A flood can occur in an upstairs bathroom; and within a matter of hours, overwhelm the house. Insurance companies distinguish between flooding and non-flooding.

Homeowner’s Insurance vs NFIP

Contact your insurance agent immediately if your house is damaged by a storm or mechanical failure. Take photos for the insurance company. You will need them for the report.  A homeowner will be responsible for the deductible in most cases.  

Groundwater and surface flooding are not covered by the typical insurance. Flood insurance must be purchased through an NFIP-participating insurer. Contact the company that provides you insurance to see what options are available!

Flood insurance is not required for the majority of property owners in the United States. You will be responsible for any water damage that results from a flood. You can minimize your losses by purchasing a policy.

How to minimize losses

  The National Weather Service estimates that there is a 26% chance of a flood occurring in any given year.

If your home has flooded, take your personal belongings to higher ground.

Flood victims often put the items in their home (like furniture) in a storage unit.

Keep all receipts from all services you have spent money on that are a direct result of the flood. This will allow you to get the most from your insurance.

FEMA might be able to assist you. Owners may also be able to borrow money from family members. Flood victims are also provided with cash, food, and home furnishings by charitable organizations.  

You can hire contractors to restore your home if you have the budget and time.

 Sometimes the home is a total loss, there is nothing that you can do but get a fresh start.  If your house is not livable, you might consider selling it to real estate investors.

Disclosing flood and water damage

Any potential buyers should be notified in writing if your house is damaged by water from a storm or a mechanical problem. It is not always necessary to disclose water damage, but it is the smart thing to do.

Any cash house buyers should be made aware that you know there is water in your basement for eight months. Do not wait until summer to sell your home to hide the problem. Remember always disclose the growth of previous mold, termites, foundation, everything!

You can see that disclosure rules are complicated. Don’t risk legal action against you. It is prudent to disclose all information. It is important to do it in writing so that the buyer cannot sue you.

Do not try to conceal water damage. There are usually residual signs such as discoloration to the floorboards, and odor. If the home inspector or buyer notices these signs, it won’t be good.

 Always disclose repairs! The buyers will appreciate it and probably trust you more! If it is too costly, you can be someone will rent it.

Selling a home in a flood zone

How Does Flood Zone Location Affect Home Value?

If your home is in a flood zone, chances are your property value will be significantly impacted; especially if it has flooded recently.

Flood risk is classified into three categories, according to FEMA: 

1.  Moderate to Low-Risk Locations
2. High-Risk
3. Dangerous (Coastal) 

Flood insurance is required by mortgage lenders for properties located in “high-risk” flood zones. However, please keep in mind that nearly 25% of all NFIP flood insurance claims occur outside of “high-risk” areas. As a result, flood insurance is recommended in all flood zones. 

The additional expense of flood insurance adds to the cost of owning a home in a flood zone. When this is combined with existing water damage to your home, the value of your property is reduced to any potential buyer.

The floodplain registry is constantly updated by FEMA. And just because your home was not in a floodplain last year doesn’t mean the property won’t appear in it this year. 

As a result, if a house is included or excluded from a FEMA flood zone map, including the change of your area’s risk category within the flood zone, the home value can suddenly change. As a result, some jurisdictions require disclosure for homes near a floodplain.

Disclosure in a flood zone

If your home is in a floodplain, you may be subject to additional disclosure requirements. As previously stated, some states have buyer beware real estate transaction laws that place the burden of discovering problems on the buyer. In these states, the buyer must determine whether the house is in a flood zone and whether there has previously been water damage. 

This is something that the buyer’s home inspector can assist with. Other states, however, require the seller to fully disclose this information. It is a good rule of thumb not to hide anything.

As a general rule, any information about a property that could affect the price paid and the buyer’s desirability should be disclosed. If you were the buyer, what would you want to know? 

If the buyer is aware of the damage and is still interested in purchasing the property, they will likely request a substantial discount.

If you own a water-damaged home in a flood zone, your situation is more challenging than if you own a  property on the beach in a hot real estate market. However, you are not without options.

According to the National Flood Insurance Program, floods are the most common natural disaster in the United States.  If you have the time and money to sell your house yourself, contact the real estate division of your state government. 

Gather all disclosure forms that apply to your situation. If any of those forms do not contain all of the information you have about your property, write it down. In the course of things, you don’t want to break the law!

If you have the time to sell your home with a real estate agent, the realtor will be responsible for providing you with the necessary disclosure forms. You could still be sued, but the Realtor would be as well. 

If you don’t have the time or inclination to deal with the water damage repairs or disclosures, sell your home to a reputable cash house buyer.

You may also decide it’s better to rent out the property than take a low offer.

To get a no obligation free cash offer for a damaged home, fill out our online form.