DALLAS — What happens when a red-hot housing market is put on ice? Yep, cracked pipes and water damage. Last month’s winter storm was also hard on houses that are for sale in Texas. Real estate broker Anne Lakusta says some of those hobbled houses are having to be temporarily taken off the market.
“I can go into our [listing service] system and tell you on average over the last 60 days, we had every day, about 28 homes that the status was 'temporarily off the market.' Today we have 374."
Lakusta is the author of a leadership book called "Pass the Pig," and she sponsors about 3,000 real estate agents who closed $8 billion in sales in 2020. She doesn’t know for sure that the hundreds of homes here removed from the market have pipe damage, but it’s highly likely that most of them fall into that category of damage.
Lenders asking for proof that homes for sale are not damaged
In fact, there are probably many more homes for sale that sustained weather damage. That has lenders worried. They don’t want to approve mortgages for damaged houses, so Lakusta says they are asking for assurances now.
"If you are already under contract, you can expect the seller may have to provide videos where they say ‘Turn the water on and open the cabinets so I can see pipes are not leaking.' Or the appraiser may have to come back out, or maybe you’ll have the inspector come back out to re-inspect.”
Advice for buyers and sellers in a real estate market that has a lot of weather-damaged homes
If you are a seller, Lakusta says, "you are going to want to update your seller’s disclosure notice." That’s the document where you list the known defects, malfunctions, and maintenance history for your property.
Also, if you are a seller…it’s clear, this is your market right now. There are unusually few houses for sale and so much demand, so you have your pick of buyers. But don’t let it go to your head. Lakusta says chances are, they’ll all want assurances you didn’t get storm damage.
"The seller can be super demanding right now because they can get another buyer. But that doesn’t make any sense because the next buyer is going to ask the same questions.”
Buyers and sellers: Lakusta says if you have a contract, "it’s totally OK if you go under contract with the intention of putting your home back in the condition you would transfer title in."
That can be done by the seller, or they can sign over insurance proceeds to the buyer, but that is a more complicated option.
If you are already under contract, Lakusta says you should know there is already a standard protection in there to deal with damages.
“There is already a paragraph about casualty loss, so the seller has already agreed to restore the property to its condition, they have already agreed to a 14-day extension that allows them to do that."
Lakusta says it’s known as paragraph 14.
How the winter storm may cause 'seller's market' to last longer
Finally, sorry buyers: This probably going to become even more of a seller’s market, because Lakusta points out that new homes were not immune to the ice.
"New construction had their pipes burst up and down their streets, in their walls—the same issues everyone else is facing, so some of the spring inventory that we were anticipating coming online is now becoming fall inventory."