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Superstorm Sandy wreaked havoc along the eastern seaboard two weeks ago, particularly in New Jersey and New York. Unfortunately, the after-effects are only starting for real estate transactions that were in progress during the storm.

Properties which about to close in affected areas of New York, New Jersey and even Connecticut have had lenders require re-inspections prior to closing. However properties outside of these areas may also be subject to another inspection, due to  agreements between lenders and nervous investors who bought closed loans. For those homes in areas with little or no damage, inspections may fortunately be only be cursory exterior examinations.

In places federally declared as disaster areas, lenders require properties to be inspected to see if they are inhabitable and retain their appraised value. Such re-inspections have delayed closings. The up-side so far is that banks seem to be extending rate locks without additional costs to the buyer on deals that are delayed past lock-in dates.

For homes under contract with damage from the storm, negotiations will have to start over again. When a home is "under contract," the seller is obligated to repair any new damages prior to closing to the buyers satisfaction, or the buyer can back out. The issue is can the seller afford to complete the repairs, and can they do it to the buyers' satisfaction. Some homes were severely damaged by water, and some aspects of water remediation are debatable. Even if re-negotiations succeed, buyers will still need to have an appraiser return to inspect the house to verify repairs and determine if the home's value was affected.

 

In the future, many issues need to be considered, such as if additional insurance is necessary to protect the property, and whether flood insurance is even available and still affordable. Rates will go up in frequently affected areas. And yes, lenders may require buyers and sellers to sign forms agreeing that the property suffered no damage.

Hurricane Sandy may be gone, but realtors in New Jersey and New York, the mess left behind will be here for a while.


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Mega Title, LLC

721 Route 34, Suite 3
Matawan, NJ 07747
Phone: 732-242-9835
Toll Free: 877-550-MEGA
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