Many victims of Hurricane Harvey have found that the settlement offered by their insurance company falls short of the actual costs associated with rebuilding and restoring the damages incurred. There are several reasons for this disparity.
Most insurance carriers employ independent claims adjusters to conduct site inspections of the damaged homes, condominiums and businesses. These independent adjusters are typically overwhelmed with insurance claims, so there is a real incentive for them to conduct the site inspections quickly, which may result in errors in the scope and pricing of repairs. Another reason the settlement offered falls typically short is that the software used by the insurance company to calculate the claims does not adequately reflect the reality of the devastation caused by Hurricane Harvey.
Hurricane Harvey – Are Insurer’s Claim Estimates Too Low?
In the past decade, there have been computer software programs used by insurers to estimate construction costs. These programs calculate structural damage, repair and rebuilding expenses. Unfortunately the models are based on tract housing and do not take into consideration such things as historic, custom or expensive dwellings. Furthermore, Hurricane Harvey ravaged areas and communities comprised of high valued real estate. As a result, the estimates produced by these software programs will most likely be insufficient to reimburse you for the actual cost of rebuilding or replacing your home.
Contractors and builders that are retained by property owners do not use this type of software program to compile their estimates. They base their cost estimates on sub-contractor bids and their general knowledge about the costs and time involved in a potential job as well as the current cost of materials found locally.
Another factor that these software programs do not take into consideration is the principal of supply and demand. The amount of damage produced by Hurricane Harvey was cataclysmic. As a result, contractors are inundated with requests for bids and estimates. The demand for skilled labor far exceeds the supply, so contractors and builders are not able to compete for work. Therefore those left to rebuild have little room to negotiate pricing, often creating a gap between the claim settlement offered by the insurance company and the actual cost of restoring and repairing their homes.
Retaining an attorney with expertise and knowledge in the area of insurance settlements can provide you with the protection and guidance necessary for a successful claim.
Selling Your Property After Hurricane Harvey
One of the most important decisions you must make in the aftermath of Hurricane Harvey is whether or not you wish to return to your storm-damaged home, condominium or commercial building, or to sell it. For many this is a difficult decision, especially if they have raised their children in their home or have lived in their home for many years. Likewise, many people who had made a decision to sell before the storm were now paralyzed by the devastation. Not surprisingly, the real estate marketplace is now frozen.
As things return to normal, the real estate market seems to be showing signs of a modest recovery. Sellers with homes on the market are now wondering what the impact of Hurricane Harvey will be on this slowly recovering home market. There are other obstacles in addition to the housing market including market forces like tight lending practices and seasonal slowdowns that occur during the winter months. In addition to these and because of certain questions concerning the recovery, many lenders are refusing to finance homes in the Sandy devastation area since lenders are uncertain of the storm’s long-term effects on momentum and pricing. Consequently, sellers are forced to rely on individuals who can purchase a home with cash. Since they are scarce, cash sellers typically demand a substantial discount on the asking price.
Home sellers need to consider the following when listing their home for sale:
The homeowner needs to ask himself the following question – “How much should I spend to fix this house and what will my return be?” If you cannot or do not want to fix the house and you made a decision to leave anyway, then you should consider selling to a real estate investor. Remember, a developer or home builder are most interested in the value of the land if they intend to demolish the house and rebuild a new home.
- Your house may not have been damaged, but the neighborhood is a mess. “Should you delay putting your house on the market until the neighborhood is renovated?” You should keep showing the home. Everyone by now knows the extent of the damage caused by Hurricane Harvey, which was a natural disaster. The only exception might be those properties in hard-hit flood areas (i.e. waterfront homes where the entire neighborhood is devastated). In these instances you should hold off showing the home until the neighborhood has been repaired.
- Leave your home on the market even if it has been there for a considerable amount of time. This is not conventional real estate wisdom, but Super Storm Sandy brought the entire market to a standstill, and everyone is in the same place, so you cannot be left behind in this case.
We have represented numerous homeowners whom have filed claims with their insurance company with regard to storm, wind, lightning and hurricane claims, quite possibly even someone in your neighborhood. Most people do not have the experience of resolving a property damage claim with their insurance company and are at a decided disadvantage vis-à-vis their insurance company. Our years of experience in assisting policyholders help level the playing field to your benefit by thoroughly investigating your damages in an expedient and professional manner. Our goal is to maximize the valuation of your claim as expeditiously as possible.