Over the years, sinkhole homes have gotten a bit of a stigma regarding value. Many believe that a repaired sinkhole property will not be able to regain its value, obtain insurance, or even get a mortgage. This is simply not true. Several variables play a role in determining the value of a sinkhole property. Let's break it down.
Unrepaired Sinkholes
The value of an unrepaired sinkhole home will be significantly decreased until the repairs are completed. A general rule of thumb would be to start at around 50% value and adjust from there. Factors that could affect the value include the following:
The extent of interior and exterior damage to the home- Buyers will consider the cost of repairs when purchasing an unrepaired sinkhole home. If the property needs extensive cosmetic repairs, a buyer may adjust his offer price to reflect that cost.
Location of the home- Buyers understand that a home in a desirable neighborhood will sell quicker and sometimes for a higher price. Because of this, they may be willing to pay more for the property.
Type of repair required by the engineer- Once sinkhole activity is confirmed, a Geotechnical or Structural Engineer determines the type of repair method needed for remediation. These repair methods can vary significantly in cost. A buyer will generally ask to see the engineer's report before making an offer and adjust his offer price accordingly.
Overall condition of the home- As with any home purchase, a buyer will consider other updates needed for the home. For this reason, an older home with little to no improvements may sell for less than a remodeled or newer home.
Repaired
Once a sinkhole repair company (like Laielli Construction) completes the recommended remediation, a property can regain the market value that was lost. In addition, buyers can obtain a mortgage and insurance on the property. As with any listing, value is determined by the market condition, audience, and inventory.
Factors that could affect the value include the following:
Not repairing the cosmetic damage- Stabilizing the foundation is only part of the process when repairing a sinkhole. Properties with sinkhole activity often have cosmetic damage to the home's interior and exterior. Some examples of cosmetic damage include stair-step cracks, tile cracking, stucco cracking, etc. Failing to repair the cosmetic damage to the structure may result in a decrease in value.
Lack of Documentation- Keeping excellent records is integral to regaining the lost value in a property. Sinkhole remediation comes with several documents including soil reports, remediation reports, and a transferrable warranty. These documents transfer with the sale and are needed by the new homeowner. A potential buyer may be wary of purchasing a property if these documents are missing. In addition, it can be difficult to get copies if the originals are lost.