Making offers on properties that just burned

6 Replies

Trying to take these bad Napa fires as an opportunity. Housing shortage we have already this will make worse; therefore seeing if I can make this a business opp to get more on line
Anyone know process for a home/apartment owner after their property has burned down?
Can they sell right away?
Do they have to settle with insurance prior to selling?
Can I do contingent offers?
Special loans for reconstruction for fires?
Structual engineer needed before rebuild can take place?
Things to go after, things to stay away from?

All these questions and more, looking for experience to guide and if even worth doing
Appreciate the input

Needing insurance company to release claims. Most owners will get reimbursed for the replacement properties.

I have a vacation rental in Sonoma that just burned down in the fires, so I'm going through this process myself.  With the scope of the devastation the insurance claims process is going to take awhile and all owners will have to go through that before considering selling.  That being said, I suspect there will be many homeowners who are underinsured, so they will likely take the insurance money and not have enough to fully rebuild, in which case they would be open to selling.

I have been wrestling with the question of rebuilding and/or buying some of the lots that burned in my neighborhood.  The difficulty is in identifying and contacting the owners of these lots - it's not like you can mail them a letter because there's just nothing left.  

The other, bigger, question is how long will it take the most impacted areas to recover.  The neighborhood that my rental home is located in looks like a lunar landscape. Even under the best case scenario I can't imagine it getting anywhere back to normal in less than 3-5 years.  The Sonoma and Napa building departments will be overwhelmed with applications and good luck finding a contractor in the next 3 years.

So if you're thinking about buying some of these burned out lots - as I am - you need to have substantial capital and be willing to wait possibly 5+ years before you'll have something to sell.

Interested to hear other people's takes on the situation.

This is going to be an interesting scenario.  Over 3,800 homes were lost within the city limits of Santa Rosa alone, and there were tons more outside of the city limits. 

But recovery isn't going to be large-scale production operation, such as would be the case if a developer bought a hundred acre tract and built a new subdivision.  Instead it is going to be a one at a time fractured process.  One at a time homeowners are going to be seeking architects and subsequently permits and contractors.  This will be a labor intensive process for the building department because every house will be a unique design, unlike a large subdivision that has a few floor plans that are repeated multiple times.

Trouble is, this county has been so anti-development for so long that so many contractors and trades people have gone out of business or moved away to run their businesses in a better political climate.  This leaves us tragically short on the resources that we need to rebuild.  I suspect that factor alone will make it problematic enough that many lots won't be built on for a decade or longer. 

Dealing with our building department folks is an exercise in complete futility.  I've had two remodel permits that were tied up in permitting gridlock for multiple years (each took about two).  Hopefully the building department will start to be more proactive, and hopefully they'll hire more people to handle the volume, but there is little incentive to do so.  With new development they get hefty fees for community impacts and they fund their staffing from those fees.  But in this case, all of this building activity will be replacement of existing structures and the impact fees for those structures are credited.  Thus, there is less money in it for the city.  Which means less incentive, and less funding to offset the need for personnel.

So if you are looking for opportunity, be patient.  There will be lots for sale for years.  Or you could become a contractor, trades professional, or architect.  You'll have all the work you can handle for the foreseeable future.

Put your mind to it and you can do anything.  With that said I believe it would be a difficult business plan.  As an insurance adjuster I have dealt with many home fires.  Usually with a large fire that damages the entire property the borrower (home owner) does not actually get the funds.  The funds are issued to both the borrower and the mortgage company.  To avoid the issue of people just taking the money and walking away the mortgage company will then keep the funds and release them bit by bit as the repairs are completed.  They will send out inspectors to make sure the repairs are completed.  Bare in mind this is not always the case, it depends on the mortgage company and their internal procedures but normally with a large fire and a lot of damage that is the way it is done.

What if the fire damages house is free and clear without mortgage?
Will the Insurance company pay the whole amount to the owner?

Account Closed Yes.  If the property is free and clear without a mortgage company but has homeowners insurance then the insurance company would pay all insured's listed on the policy.  If this is say for example a husband and wife both names would be listed.  If the policy only has one name then it would only have the single name.  Now if the property had a mortgage and you paid it off but did not notify the insurance company the mortgage company would still be listed on the payment until the insurance company received proof that the mortgage had been paid off and that no other mortgage exists on the property.

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