Quick Summary
When trying to price your flooded home for sale, walk around the house and collect everything that might prove useful to a buyer: flood and aftermath photos, insurance correspondence, repair invoices, records of mold and remediation, utility notes, and repair contractor estimates. Then choose from three paths: Repair and list, list flooded as-is, or sell directly to a cash buyer. As you decide which path seems best, keep in mind that each offers different net proceeds to you, takes a different amount of time from start to closing, poses different risks regarding disclosures, and works best with different types of buyers—or none at all.
A few simple steps will help you to clarify what's going on with your flooded house. Begin by determining the source of the water and how high it got. Take photos immediately. It's important to establish whether the water was clean rainwater, or a messier backup from bayous or sewers. Keep a record of the date, time, and rooms of the house that were affected, the height of the highest water line, how long the electricity was out, and when you began the home-drying process. Then take photos that emphasize problems: Of baseboards, cabinets, HVAC (including the electrical panels used to power it), flooring, and any other place where you noticed mold after the water dried. Realize that, to price your house properly, you shouldn't rely on what's obvious—such as warped or ruined flooring. Floodwater could reach insulation in the walls, wall cavities, subflooring, ductwork, appliances, electrical components, or foundation stones. An inspector engaged by a buyer might raise additional red flags: existing mold not attributable to the flood, movement in the foundation caused by softening of the ground, any prior claims filed with insurance companies, and lack of permits for repairs. If any of these problems surface, a buyer might reconsider, or require financing that's harder to obtain, or ask you to renegotiate the price beyond restoring the house to its cosmetic state before the flooding.
Texas sellers are required by law to provide some flood-related information to buyers using a TREC Seller's Disclosure Notice. When answering flood-related questions, be sure to refer to records that you've kept, rather than relying on your own memory. For example, be truthful but concise in answering: Has this house flooded before? Has it been insured for flooding? Has there ever been a flood-related claim? Has water ever gotten into anything? Is the property in a floodplain, floodway, or reservoir? If you don't know, say, "Unknown." In addition to answering the questions on the Seller's Disclosure Notice, ask yourself the following questions about the house: Determine from a map whether the property is in a floodplain, floodway, or reservoir, by using the Harris County Flood Control District mapping tool, or the Flood Map Service Center maintained by the Federal Emergency Management Agency. Print out the map and keep it with other information or save the link to it online. Keep flood insurance proceeds (or evidence that they're being held for reimbursement of repair costs) and any letters on disaster assistance. If a buyer completes the purchase, he or she might ask you what work you've completed, what permits were required, and whether you still have to keep the flood insurance policy in effect. If you've kept a complete file, there'll be less of a chance of surprises that could cause the sale to fall apart during option periods or at closing.
Path Two: Repair-and-list
This is the best choice if flooding was relatively minor—the water wasn't high or lingering, it was limited to a small corner of the house, and the drying out was completed swiftly. It's also a good option if you have cash to pay for repairs and the time to schedule repair work, get needed permits, schedule and pass inspections, list and sell the house, and handle buying a new house (if that's necessary). You'll need full, dated invoices and photographs showing before and after; receipts for all materials and labor; repair warranties; and permit records. Risk factors to think about include the possibility that further repairs will be needed after you've drained the house. And remember, you'll continue to pay the mortgage, taxes, insurance, utilities, lawn care, security, and possibly temporary housing if you have to move out while the repairs are being completed. Before deciding on this course, get in writing from your contractor a scope of work (contract) showing all phases of the repairs to be completed. Add these extra carrying costs into the total. How does that number compare to the sale price you'd get if you sold the house repaired, after deducting commissions and closing costs?
Path Three: As-is listing
This keeps your house on the market with buyers responsible for any repairs they want to make. This tactic could work well if the home is safe to show, you want exposure in the market, and you're willing to lower the price enough to attract cash buyers and investors who won't object to a flood-damaged property. The listing should simply state the property's known condition, making it plain that you're not trying to hide anything, and offer the disclosure packet to interested buyers early in the process. This route's main risk is buyer fallout because a lender might refuse the property, or insurance or inspection problems force renegotiation. The seller should expect longer marketing time and a smaller buyer pool.
Path Four: Direct cash buyer
This route involves fewer showings and no seller-funded repairs; the buyer prices in any needed cleanup based on the home's current condition, its likely resale value, scope of repair work, expected holding costs, and flood history. The offer you get will often be lower than the repaired retail price you might sell for because the buyer is absorbing the work and risk. The important thing to look at in comparing offers is the net cash you'll pocket and the certainty of ownership transfer, not the headline offer price. A written cash offer should tell you the price, closing date, closing costs, option-period terms, and who would be responsible for any repairs. Be sure to get proof of funds available and a written acceptance of your flood disclosures. Companies like GetHomeCash in Houston and nearby areas will buy your house as-is—flood-damaged included—and can make you a direct, straightforward offer via Internet, phone, or in person. This path is best if you want to stop carrying costs, avoid contractor hassles, or close before your deadline.
IN HOUSTON
Before making any offer, you can check the city's permit history to determine whether any flood-related repairs to the foundation, roof, plumbing, or electrical wiring were completed and permitted. A permit for such work isn't required, but the lack of one could cost you as a buyer if you later decide to do repairs or sell.
Next, use the following worksheet to help decide which sale path makes the most sense for you.
- Repair-and-list estimate: Written estimate from at least two licensed Texas contractors for repair work, plus permit fees, utilities, existing mortgage payoff, property taxes, insurance premium, lawn care, and selling costs.
- As-is listing estimate: Expected investor price minus real estate commission and other concessions, closing costs, and carrying costs for the period of time you expect the house to stay on the market.
- Direct cash-offer estimate: Written offer minus seller-paid closing costs, with both closing date and repair obligations clearly stated.
- Disclosure file: Include the TREC notice, before-and-after flood photos, insurance company letter confirming bank requirements, repair invoices, permits for substantial repairs, printouts of flood maps showing your home's location, and any mold test or remediation documents.
- Timing limit: The latest date you feel you can carry the property without missing another housing-related, tax, insurance, or debt payment deadline.
To make a decision, compare the three estimates and pick the one with a documented net number (who gets what) and one that will close by the deadline you set. Don't settle for a theoretically higher price; choose the path that's most compatible with what you need. A repaired retail sale works well if flood damage is limited and you can invest enough money and time in repairs before the market cools. An as-is listing works if you'd rather expose the house to marketplace feedback and can tolerate possible fallout. A direct cash sale makes the most sense when closure date and cash price certainty are top priorities. Selling a flooded house is in many ways a records-and-risk problem. Before making an offer, gather a full history of your home's flood exposure, complete and organize your disclosure file, determine whether you're in or out of a flood-mitigation zone from the map, calculate how much you'll be risking by repairing damage, and line up at least two written offers based on net proceeds. If you still can't decide what to do, or if you're uncertain whether you have enough repair budget or repair time before another deadline, consider taking an as-is cash offer now. At least you'll have a clear number and a closing date before you spend any more money.