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Need Help! Appraising in a fire area

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Mike Foil

Thread Starter
Freshman Member
Joined
Feb 17, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
I need some help preparing for the near future. I appraise in the whole area covered by the fire in the news in Arizona. I would imagine that there will be appraisals needed in some areas and communities that have been partially or totally burned.

If you have any market data that supports the effect to value caused by wild fires burning thru residential areas and what value changes took place soon afterward to those homes which did not burn, I would appreciate hearing from you either here or by contacting me directly. This is going to be a rare experience dealing with such a disaster. As of now, eight communities have been evacuated and some have already burned. My hometown of Show Low is being evacuated right now.

Any help you can offer will be appreciated as to how to deal with a disaster area before local market data begins to appear.

Thanks,
Mike Foil
Phone: 928-474-9519
Fax: 928-474-0493
email: [email protected]

ps - I've missed you guys and gals.
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Mike, I too cover some territory which is affected by our on-going fires and certainly some homes I have visited are now gone. There was a news story on TV few days ago about all the held-up realty sale closings because no insurer will write a policy for them if the home is within 10 miles of any leading edge of the advancing fire ! Some who may have thought of moving to our local pine-covered hills may not do so now because of the threat of other future blazes, or lack of any green surroundings, the lingering smell of burned wood and scorched earth, and numerous other buyers' reasons. Considering how pricing has been stable out there since Sept. 11th, and now these fire events, I expect to see dramatic influences upon values as the summer selling "season" plays out. Will simply have to keep a close eye on MLS database. I wish now that I thought to print out active listings and pending sales within the market areas which have been affected and follow those over time. I would think it may be interesting and a very good learning experience to see if it were possible to accompany some insurance claim adjusters on an occasional day here and there. Don't know how that idea might be received, yet not as being an employee. Although I am down here in the city and my home is not threatened, I should probably call my agent and see how his company is mobilizing for their post-fire claims services. Their missions are to make coverage payment to their policyholders who decide to stay and re-build, or not to stay and to move on elsewhere. It has been said that "all politics is local" and so can it be said of market values for real property, and now this specific market area here will soon find that out. I wish you well in avoiding any harm to your home. There are several other Arizona appraisers who participate in this Forum and I am sure they will be able to offer your closer support to what you seek.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Mike,

I agree with Ross when he says that you'll just have to keep a sharp eye on future sales and see what comes out of it. That will be the only true indicator of what could happen next. Your life is going to be on hold until the smoke clears.
My area has been on evacuation standby for two weeks now. Two years ago I was evacuated for nearly a week when the Hi Meadow Fire burned out 40 homes and about 13,000 acres. Hard to believe that was such a big deal at the time compared to what is happening now in Arizona and Colorado, but it did give me a chance to see some of the effects on the local market at the time.
With that particular fire there wasn't a big impact on homes that were close to the burn areas, but new homes that were rebuilt directly on ground zero (for lack of a better description) sold for significantly less than similar homes just a mile or two away that were unscathed. Homes that did not burn but had views of burned out forests took a hit as well. Bottom line was that nobody wanted to look out their windows and see charred earth and blackened stumps. Overall the market on nearby homes barely flinched and continued to rise at a healthy pace.
The magnitude of the Hayman Fire and the one you are now dealing with in Arizona is much greater. The economy is different from two years ago as well. As Ross mentioned, insurance companies are stepping back and this is bound to have an effect on the ability of potential new buyers to get loans at all. Hayman isn't even completely out yet and I'm hearing stories about closings that are falling apart due to the buyer not being able to secure insurance. People who had their homes on the market before this all started are dead in the water. The market in my area has been flat this year, but now the buyers can't buy and the sellers can't sell, right at what would normally be the peak season for real estate sales. The entire area is on hold.
Best of luck to you, Mike. I know exactly what you are feeling right now and all I can say is hang in there. It's bad enough wondering if your home is going to burn down, but having to cope with the possibility that your job may be going up in smoke as well is enough to put a person right off the deep end. Worst of all is the sense of helplessness to do a d*mned thing about it.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
If you're interested in historical data, you might contact appraisers who work the Daytona/Orlando areas. Remember the fires that swept across central Florida a few years ago. There should be adequate historical data as to long term effects, if any.
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
Everybody hold on, ; your home owners insurance premiums will be increasin next year rather U live in Maine or Sho Low AZ. Meeting have already started & will be on goin as to the increases. Contractors in Colorado & Arizona other parts 2, but these two States I know for a fact there insurance if they can get it is gonna be Mind Boggling next year.
Many parts of AZ & Colorado will be assesed AZ start is tentative July 15th Many rebuilt homes WILL NOT be able to get insurance Should cancel the WILL NOT They probally WOULD NOT pay the premium that new home insurance in CERTAIN parts will cost. There are some formulas that are used to fiqure where & how they'll set the prices & the No Insurance available area's. Will keep U all posted as these meetings & what can be devulged is given to me. THINK about all those "Can U Strech it just another 5,000 to help em out Appraisals are gonna come into play WHEN the INSURANCE MAN says here is a CHECK for your REPLACEMENT VALUE.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Karl,
I have heard that it is typical that an insurance company that has to pay out for a burned down house to be rebuilt will drop the homeowner immediately after the work is finished. I can't for the life of me figure out why, when there are no longer any trees around the house to catch on fire! :?

The rumblings are going around as to how the insurance companies are going to handle future homeowner's policies and rates. Once they raise them you can bet they'll never go back down, even if we get years of normal non-drought weather.

Sorry to vent, but insurance companies are in business to make a profit, so even if they have to pay out to those who lose their homes now you can bet they'll take it out of everyone else's hide in the future.

Please DO keep us posted on any information you might get.

I did an inspection on a home (purchase) today, and the listing realtor said that the insurance company for the buyer wants an inspector to come out to the home to do a fire mitigation check. I'm certain that this particular home probably wouldn't pass the current codes that are enforced for tree removal on new construction, so I'm dying to see if the homeowner will be required to take out more than a few trees surrounding the house before the insurance company will write a policy for the buyer.

Dee Dee
 

Mike Foil

Thread Starter
Freshman Member
Joined
Feb 17, 2002
Professional Status
Certified Residential Appraiser
State
Arizona
Thank each of you for replying.
I have already seen one order cancel due to the buyer not being able to get insurance and this is for an area 30 miles from the fire.
Some of your thoughts as to post-fire results in market effect are what I expected to hear...
Take a big hit if you are in the immediate area of a burned area...
If your house has no damage and you cannot see the fire damage, then you should be OK...
Who knows, the ones left with decent views may even have higher values due to increased demand for these areas...

This will be interesting...

Thanks,
Mike Foil
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
...insurance companies are in business to make a profit, so even if they have to pay out to those who lose their homes now you can bet they'll take it out of everyone else's hide in the future.

Yeah and the stock market losses of all the loverly lucre they had stashed to back those claims which is now worth a bunch less than it was a while ago gets factored in also...

Any bets HO insurance becomes a land of the haves and have nots just like medical???
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Mike,
My references to the market perception in my area after the Hi Meadow fire two years ago may not apply to the current times. I saw no increase in HO insurance rates after that fire, so any measurable impact was isolated directly in the area of the fire. Like you, I'm waiting to see how this will all play out. Please pass on any information you get....inquiring minds want to know. :?

LeeAnn,
I know many, many good people in my community who are just making ends meet right now. If the rumors that HO insurance premiums could triple turn out to be a reality, they'll be in bad shape. Buyers would have to factor in an extra hundred or two hundred dollars a month on their payments, which will bump a number of them out of the market.
Sure wish I had a crystal ball right now, but instead I've got my ear to the ground and will have to wait until the ash settles. Arrrggghhh!
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
We are wondering the same thing here in Colorado Springs. Just had a planning meeting for our next CAREA (Colo Assoc. of Real Estate Appraisers) meeting and we are attempting to bring in US Forest Service experts to discuss this very issue. Included on the program will be representatives of major insurers for this area. Should be a very interesting meeting.

DeeDee, you might want to come down for this one, will keep you posted. Didn't know you were close to a fire too. Ours has burned 137,000 acres and 133 homes...it isn't finished yet.

I received a request to appraise a property in Florissant, Colorado. The fire is a mere 3 miles from there. I told the appraisal management company I would not do anything until the fire danger is over and then I might not be able to estimate the effect the fire has had on property values. They said....just do it from the plans and specs and use my best judgement. I said, "sure.....like I am going to put myself on the hook for $200,000+....no thank you!".

There are no real estate closings happening anywhere in the fire danger zone including Woodland Park. No one is writing new fire insurance and the lenders won't close without it. Affect the value?????.....damn straight it does!!!

All of us are still coughing from the smoke.
 
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