An Appraisal, Followed by a Hurricane
On the morning of Monday October 29, Wells Fargo sent an appraiser to the house I’ve got under contract in Cranbury. The sellers allowed him access, he inspected the property and collected the data he needed, and he retreated to his home office to crunch the numbers.
That afternoon, Hurricane Sandy hit New Jersey. Was that appraisal still good?
Actually, no. When disasters like this happen, lenders (or buyers, if they’re paying all cash) will require proof that the property is still in the condition it was in when the appraisal was performed. Wells Fargo now required official confirmation that the storm had not caused any damage and that the appraisal was therefore still accurate. It may also require the buyers to sign a so-called Affidavit of No Damage, certifying that the property has not sustained any damage or flooding from the disaster.
Lenders will Require Re-Inspections If Disasters Occur After Appraisals Take Place
In practice, this means any properties that were appraised before the storm must be re-inspected (exterior only) by a qualified inspector to confirm they suffered no damage.
We were lucky. Our inspector had left behind radon boxes which he had to retrieve 48 hours after the storm. At that time he performed a re-inspection of the exterior and was able to confirm that the house had suffered no damage from the hurricane. Phew!
This requirement for re-inspections and in many cases re-appraisals will surely create extra work in the coming weeks and cause many closings scheduled for late November and December to be pushed back.
Tomorrow I will write about another aspect of Hurricane Sandy’s effects on real estate: property tax assessments.