How To Look At A House
McGarry and Madsen's home inspection blog for buyers of
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How does a repaired sinkhole under a house affect its market value?
Friday, October 26, 2018
Houses that have had sinkhole repairs sell for around 10% less than a comparable house that has not had previous sinkhole problems. A 2016 joint study by risk management professors at Florida State University and University of South Florida pegged it at 9%, and also found evidence that a home’s location near known sinkholes “has a negative impact on selling price,” without defining a percentage.
Although it could be argued that a house that has had a sinkhole professionally repaired—with specifications by an engineer and work done by a qualified contractor—is less likely to have future problems than one nearby with no current signs of sinkhole activity under it, some buyers simply refuse to consider a sinkhole-repaired house. So the pool of available buyers is smaller.
Also, getting homeowner’s insurance requires providing extensive documentation of the work done and final approval by an engineer. In some cases, a homeowner may have to get “builder’s risk” insurance, also called “surplus lines,” if Citizens Insurance and other providers will not issue a standard policy. To learn about builder’s risk insurance, see our blog post How do I get insurance if my home can't pass a 4-point inspection?
If you own a home with a current sinkhole problem or a repaired sinkhole, it must by law be reported in your disclosure statement to any homebuyers because it will materially affect the value of the home. To read a sad story about a home with structural damage due to an unrepaired sinkhole, and only cosmetic repairs done, then sold without disclosure, go to our blog post Should I trust the Seller's Property Disclosure Statement?
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