As the laws are about to change regarding Sinkholes in Florida once again, to benefit the insurance companies of course, questions arise about why West Central Florida, what is a sinkhole, what if my house gets a sinkhole, can you insure a home after it has had a sinkhole, and on and on and on. Images of homes being swallowed up by a sinkhole draws the same fear as being eaten by a shark in parts of Florida.
To make matters worse, much of the information being provided is by companies that stand to profit from the panic and fear. The reality is that very few catastrophic sinkholes have ever occured, and the reason their appears to be so many now is that people are taking advantage of their last chance to make a claim. People are filing claims in record numbers, hiring Public Adjusters and Law Firms specializing in sinkhole claims to fight the insurance companies, hoping to hit the jackpot, have their homes paid off, and unfortunately in many cases, take the money and let the properties go into foreclosure.
I am not writing this in an attempt to disparage legitimate claims, to propose that I am an expert, although I have met with many Sinkhole Remediators, visited their facilities and videotaped demonstrations of their equipment. I have listened and learned so that I may better inform my buyers and sellers. I will blog in the near future about the different methods of remediation. The Southwest Florida Water Management District (SWFWMD) has a very informational website and brochure explaining all the geological and historical perspectives without any personal agenda. I want to share my perspectvie as a Real Estate Broker, share the tragedy of the aftereffects of some of the claims. and the regrets of the owners that filed them
I listed a magnificent home last week. It was located in a deed restricted subdivision on a half acre lot, over 2100 square feet of living area, a 3/2/2 pool home that appeared to be in perfect condition. The owner was a widow who needed to move back to her family. When I did the comparables, the home appeared to be in the range of $200,000. I did my homework, went into permitting department records, looked at the history of inspections from the property appraiser's website, and found the evidence. A sinkhole claim. When I went to the home I asked for and reviewed the geological reports, estimates and engineer's reports. I got the first two. The engineer's report? Nope. Without the engineer's report stating that the home was repaired and now structurally sound there could be no Homeowner's Insurance. No Lender would touch it. The kiss of death for a fair sale.
So what happened? Unfortunately, as in so many cases, they could not foresee what was coming. They did not realize their home would now be stigmatized. They took the money, paid off the house, and did not fix the "damage". I could not find any damage and re-read the report. It was there, in black and white. To a buyer from anywhere other than Central Florida? No deal. To a buyer who needs a loan? Without an engineer's report, no loan, no deal. So who would buy this beautiful home? A local investor who would hold and rent, or a sinkhole remediation company for a drastically reduced price. A tragedy indeed. My widow had paid off the mortgage with the money, and when her husband became terminally ill, remortgaged the home to pay medical bills. She now owed more than the home is worth, and now I have an unremediated sinkhole short sale home to sell. I have a large bank of investors who are ready, willing and unafraid to purchase such a home, at a very deep discounted price, and I will sell it. Because it is a short sale, the seller is under a duty to disclose, so the transaction will be with eyes wide open for a buyer.
For all of those people surfing the real estate websites and seeing the unbelievable deals today? Beware. If it is a foreclosure, the Banks do not disclose if there was a sinkhole claim. They claim to know nothing. Strange, since the insurance companies make the checks out to the owner and the mortgage companies together. Selective memory perhaps on the part of the lender?
If a buyer does their due diligence and finds evidence? The lender will sign a form allowing the engineer who performed the report after remediation to send the report to the prospective buyer so that they may acquire homeowner's insurance. But without a very diligent and knowledgeable professional Realtor,or buying at the foreclosure auctions? Guess....