Tropical Storm Irene Causes Power Outages, Storm Damage, and Houses are Pulled Off the Market

Tropical storm Irene did more than just inconvenience those in the New York state area. The low-powered storm managed to put many without essential services such as power.  An unexpected effect for the housing market was to have houses which were being shown get pulled off the market because of storm damage.

Many intrepid local realtors went ahead with sales that were in progress right after the storm, even going in for pre-purchase walk-throughs with flashlights. Insurance surprised some homeowners who found out that wind damage was covered but that flood damage was not covered under their standard homeowners policies. Some did not elect to get extra flood insurance and suffered setbacks in their sales plans and losses for repairs, time off the market, and related expenses.

According to the New York times:

Other closings were postponed, perhaps indefinitely. Dorothy Herman, the president and chief executive of Prudential Douglas Elliman, said that even if buyers had already been approved for a mortgage, “the banks are all going back and reinspecting the house to see if there was damage,” in which case “they are not going to give the mortgage for the same amount anymore.”

Sellers whose homes were damaged had to take them “off the market and fix it or take a lot less,” Ms. Herman added. And since most homeowner insurance policies include wind coverage but not flood insurance, which needs to be bought separately, “if you were in an area that flooded, you are out of luck.”

Lori Schlesinger, the broker-owner of Lori & Associates LI Realty in Cedarhurst, said that in an already difficult housing market, the “unwelcome visit of Hurricane Irene has not been helpful.” Since the storm, she added, some sellers are using vague excuses to keep potential buyers at bay until fixes can be made. “Once you say ‘water,’ ” Ms. Schlesinger said, “people assume it’s a bad house.” Conversely, sellers whose basements stayed dry are “bragging” about their homes, she said.

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