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Water damage accounts for 29% of annual home insurance claims, according to Forbes Advisor. Whether the source of the issue is a leaky pipe or a flood caused by a storm surge, selling a home with water damage can affect your home sale. Often, water damage isn’t detected until a home inspection.
Top-performing real estate agent Christy Friesen of Wichita, Kansas recalls a time when her client learned their home had severe water damage after a buyer’s home inspection.
“I had a case where an inspector in the crawlspace discovered that the water line in the back of the refrigerator had been leaking — possibly for months,” she explains. “Some of the beams and the floorboards had to be redone.”
Selling a house with water damage can significantly impact your home sale. But with preventative guidance, sellers can avoid a crisis that can potentially cost thousands of dollars.
Common causes of household water damage
During a home inspection, an inspector will assess the condition of a home looking for safety issues and health hazards such as water damage that can cause the growth of black mold. Many home inspections also check for corroded and rusty pipes, which can also lead to leaks and water damage. Before you put your house on the market, make sure to check your home for the most common sources of water damage:
- Rusted and leaky pipes
- Leaking faucets and toilets
- Water sewer issues
- Backflow and cross-connection problems
Many issues can contribute to leaking pipes such as age, freezing, corrosion, and rust, which can affect your sale. Another cause of leaking pipes is improper pH balance levels in your water, which can dissolve the copper in pipes. The proper pH balance should be 6.5 to 8.5 for drinking water. Acidic water too low or alkaline too high can be unsafe to drink.
Prevention tip: Look for discolored water and low water pressure. Other signs that indicate leaking pipes include:
- Water stains on your ceilings
- Bubbling and peeling paint on walls
- Cracks in the floor
If you discover any of these signs, contact a plumber.
Flat roofs are engineered with a slight angle that enables water to flow off the roof into gutter systems. However, the weight of debris, tree branches, and ice dams can cause water to pool on roofs. Ice dams in winter trap water preventing it from running off the roof as designed.
When your roof becomes encased with ice, it can trap water and create roof cracks, ceiling leaks, and mold.
Prevention tip: If you have a flat roof, inspect your roof and remove any debris that could block the flow of water. You can also hire a licensed roofing contractor to repitch the roof.
Clogged gutters are another issue that can cause water damage, especially when they’re not properly maintained. Falling leaves, debris, and even small pests can get stuck in gutters, causing the water to overflow down the side of your home, instead of through your gutter system. This can cause water to shift the foundation, ruin landscaping, and flood your basement.
Prevention tip: Always maintain gutters. They should be cleaned at least twice a year, once at the end of autumn after the leaves fall and in winter. If you have a lot of trees on your property, consider gutter cleaning three times a year. You can clean them on your own if you’re comfortable climbing a ladder or hire a gutter cleaning professional.
Floods from storm surges
While storm surges and hurricanes are natural disasters and can’t be avoided, FEMA says homeowners can take measures to minimize water from entering homes by:
- Recaulking windows and door frames
- Sealing cracks and gaps
- Installing storm shutters and high-impact glass on windows
- Reinforcing your garage door
- Using flood-resistant drywall, insulation, and tile floors
- Storing appliances, contents, and important documents above the Base Flood Elevation Level (BFE), the height that floodwater is likely to rise.
To find your BFE, you can look it up on the National Flood Hazard Layer database.
Carry the proper home insurance coverage
According to bankrate.com, insurance companies pay out $20 billion dollars each year for water damage claims with the average household claim costing around $11,100. This number doesn’t include homeowners whose damage wasn’t covered and needed to pay for water damage out of pocket.
Types of water damage covered by home insurance
- Sudden or accidental discharge
- Storm-related water damage
- Water or sewer backup
On the other hand, most insurance companies won’t cover water damage related to wear and tear such as a gradually leaking pipe that’s been dripping slowly for a month. But home insurance policies are likely to cover a pipe that suddenly bursts and floods the kitchen.
Allstate Insurance Company notes that two types of coverage within a standard homeowners policy that might help homeowners for accidents or sudden water damage issues include dwelling coverage and personal property coverage. But that doesn’t cover flood insurance, which must be purchased separately.
Clovered, an insurance company which services 19 U.S. states offers the following claim filing tips for homeowners dealing with water damage:
- Notify your insurance company immediately
- Move undamaged contents out of the way
- Document the damage by taking photos and videos, an inventory of damaged items, and by providing receipts
- Drain and dry water
- Keep damaged items until your insurance company authorizes you to dispose of them
Remediating the effects of water damage
Bart Tipton, a top-selling Bakersfield, California real estate agent who’s facilitated 1,160 transactions to date says that water damage can be an inconvenient and costly problem that can arise during a home sale.
“They can take down the sheetrock as much as three feet in the walls, clear out all the insulation,” says Tipton. “It’s expensive; most of the time the insurance will pay for it, but it’s extremely inconvenient.”
Remediation is essential if you discover mold, says Tipton. “I’ve had people have leaks underneath a bathtub or something like that, that they found during the inspection, and they have a mold test done just to make sure there isn’t any mold.”
“And if it is, which I have had in the past, have a mold remediation company come out and do it.” Tipton says,” it does get expensive, [costing between] $4,000 to $7,000, but you really don’t have too much of a choice.”
Are you required to disclose a property’s water damage history to buyers?
It’s critical to disclose water damage to buyers when selling a home. If you don’t, you can end up in litigation. Real estate agents will provide a disclosures document that requires sellers to inform buyers about any known property issues. While disclosure laws vary from state to state, when in doubt, disclose. If you don’t disclose issues about the property, the buyer can sue you for the damage after the sale.
Mac Martinson, a Huntsville, Alabama real estate attorney says, “The seller could be liable, if they knew of the damage, as this is a health and safety issue and the seller did not correct the problem.”
The biggest challenges of selling a home with water damage
Selling a house with water damage presents a variety of obstacles to sellers as well as buyers such as the following issues:
- Reducing the price: If a buyer agrees to purchase a property with water damage, it’s only natural they’ll want to lower the offer by knocking the cost for reparation and remediation off the price.
- Health hazards: A home flooded by a natural disaster or a water issue in the home can pose health concerns for inhabitants, especially if there is mold present in the home.
- Safety concerns: If the water damage has affected the home’s electrical system, it can cause a security and safety risk, or even an electrical fire.
- Future water damage: A home located on the water or in a flood zone can be hit by future hurricanes and storms, which can cause potential flooding issues. Although buyers know a home is located in a flood zone, they might use this as a negotiating tactic to reduce the price.
Tips for selling a house with water damage
Consider selling your house to a cash investor “as is”
If you’re having trouble getting to the closing table, or would like to avoid the hassle of hiring restoration specialists and contractors to do assessments and repairs, consider selling your house “as is” to a cash investor through HomeLight SimpleSale.
HomeLight’s platform has access to a network of pre-approved investors, including iBuyers, house flippers, and buy-and-hold investors. Simply enter your address and a few details about your property and the platform will match you with an investor who can present you with a cash offer in up to 10 days or less.
Research mold remediation options
If you’d like to receive the best offer for your house, it’s best to foot the bill for the water reparation. If you hand off the task to the buyer, you might need to accept a much lower offer.
Repair the damage
If your house doesn’t need mold remediation and the damage is fairly minimal such as moisture damage to furniture and a few walls, you might opt to repair the damage DIY. Another option is to ask your agent to recommend a contractor.
Provide evidence of remediation in writing
Your sales contract should clearly state the steps you’ve taken to mitigate the water damage. Make sure to collect receipts, invoices, and any documentation, including warranties to present evidence to the buyer.
Speak to an experienced agent when selling a house with water damage
If you’re considering selling a house with water damage, speak to a qualified real estate agent. An experienced agent can connect you with their network of preferred contacts from restoration specialists to contractors and home inspectors to arrange a pre-listing inspection if you’d like to assess your home’s water damage before you list your house on the market.