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The Stigma of Sinkholes, Will My House Be Swallowed Up?

By Jeanne M. Gavish

Real Estate Broker/Owner with Jeanne Gavish, Keller Williams Realty Elite Partners

April 12, 2011 01:50 PM

Sinkholes in Spring Hill 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....

Sinkhole Homes in Hernando County Florida

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Morgan Evans

Douglas Elliman Real Estate - Manhattan, NY

LICENSED REAL ESTATE SALESPERSON

I had no idea sinkhole's could be a problem for residential sales. If there was a sinkhole in Manhattan it would be all over the headlines in the news.

Apr 14, 2011 06:06 AM

Anonymous

Carole Sanek

We have a 1963 square foot home with a 1950 sf relic sinkhole in our front yard that according to the Geologist we hired probably goes under our house. Our house is leaking when it rains. We have mold. My truss line ceiling joint is cracking and separating at the peak of my cathedral ceiling. If I close my pocket door in the laundry room I get locked out of my house and use a crowbar to get back in. I have also been locked in my master bathroom same type door. I can see daylight under my exterior doors. My sliding door to the lanai has a gap. I have cracked tiles, I have lifting tiles on the floor. My tub is no longer "seated". Every room in my house has cracks somewhere.

The engineering co the insurance co chose has made two glaring errors in their report, they fixed one, and there is another error caught by the Geologist. The insurance co wants to cheap out of course and fix the under ground and above ground as cheaply as possible.

The new opinion is that it is probably not "fixable" because they never hit limestone at 100 feet of boring and lost circulation on all 4 boring points.

Our concern is if we grout and there is this huge anomaly out front that they won't attempt to fix is that our house could slide into the anomaly as the grout disturbs the ground.

We live in Brooksville. I contracted for insurance, and it is nasty dealing with them - very nasty.

Apr 14, 2011 08:01 AM

#31

Carla Muss-Jacobs, RETIRED

RETIRED / State License is Inactive - Portland, OR

YIKES . . .haven't had to deal with this (knocking wood). :-)

Apr 14, 2011 02:03 PM

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

Thanks Michael!

Brian, it's pretty much a Florida thing, but I didn't know how few people knew about them.

Morgan, I hear you! I lived outside the City for many years.

Apr 15, 2011 01:22 AM

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

Carole, your tale is heartbreaking. I know what it is like to have to fight the insurance companies when your home is unstable and in jeopardy. I am not sure what you mean by unfixable. Please don't let them shoot grout under your house. Underpinning is the way to go. Advanced Pier Technology did a friend's house and was very reasonable.

Apr 15, 2011 01:27 AM

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

Carla, it's a Florida issue. Especially West Central Florida. thanks for checking in.

Apr 15, 2011 01:32 AM

Anonymous

Dan Stewart

Hi Jeanne - I saw your post and needed to clarify something. Underpinning a structure does nothing to strengthen the soil beneath it. Underpins consist of a steel bracket attached to the foundation, which transfer the load of the structure on to a steel pipe pile. The piles themselves are small diameter (2.875" typically) hollow steel tubes that require lateral support from the soils they are installed in.

If Carole were to install underpins alone, without first stopping the raveling soil conditions, the repair is temporary, despite contractors' claims or guarantees. Part of the problem with sinkhole remediation in Central Florida is the great quantity of misinformation. Hope this helps :)

Here is a link to a video on the subject that I produced in association with the US Geological Survey.

http://www.geo-logical.com/about-sinkholes

Apr 15, 2011 03:20 AM

#36

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

Dan, I watched your video and I am very impressed. I really appreciate the fact that you found my blog and took the time to share your expertise. Thank you for clarifying for those of us who are not experts.

Apr 16, 2011 06:45 AM

Anonymous

Thanks for all the advice her, it has been very informative! Yet very confusing. The engineering companies base their recommendations on whether to underpin or grout based on the damage to the home and if there is not large separation cracks, they don't recommend underpinning, but just grouting and chemical grouting. So, my question is how stable is a remediated sink hole home that has been fixed with grouting for long term? It sounds like underpinning may have a longevity. I was told that the lifetime warranty is only for the pins if something goes bad, but they don't warrant the home if it develops into a sink hole again even with underpinning. Does grout have equal longevity as underpinning?

Apr 20, 2011 05:31 AM

#38

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

to #40, I can only share my experience as a Real Estate Broker, and I have spoken with sellers who have had only grout pumped in, and when they got another and yet another sinkhole, there was no evidence anywhere of the previous grout under the home. How can they know where it goes when they grout?

Apr 20, 2011 09:39 AM

Anonymous

Thanks Jeanne for your reply. The interesting thing, a remediated sink hole home we were looking at had used grouting and chemical grouting (no underpinning) and costed $134,000 for the grouting. When we asked a contractor how much it would have costed to underpin it, we were quoted a price of $35,000-$45,000. I know another smaller home in the same area only costed $25,000 to under pin. These messages indicate that grouting is much cheaper than under pinning. Why would grouting be so expensive on this home? One might think that when it costed that much to repair, it would be a solid structure, but these messages indicate that it isn't.

It's rather frightening to look at purchasing a home in Hernando and some of the other surrounding counties. How will this affect resale value and encourage people to buy homes that will be too expensive to mantain or the stigma of the fear that your home has high risk at developing a sink hole?

Apr 26, 2011 11:33 AM

#40

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

To #42, many people think that repaired is repaired, and this is just not the case. I have had people tell me that they have been told there is NO EVIDENCE of grout under their home, yet they have evidence that it was "repaired" using grout. I understand using grout to fill the home, but I have heard too many people who have had multiple sinkholes, grouted only, no evidence. It appears (and again I am not the EXPERT) that the house needs underpinning to keep it secure. I am not going to begin to touch the alleged price fixing of grout here.

Apr 26, 2011 01:59 PM

Anonymous

Tallahassee Homepwner

Last year we bought our dream home. We waited until we had all credit cards paid off, 6 months of bills in the bank and 25% down on the house. It took us 3 years to find the perfect house in a beautiful neighborhood. 4 moths after we bought the house, we started seeing changes. I started getting contractors, etc to find the problem. At this point, the steps on the back of the garage had dropped over an inch. The corner of the garage looked like the incredible hulk grabbed the bricks and twisted and pulled. And there was a large crack in the slab. When the builder told me I hit the garage I called the insurance company. The insurance company sent the sinkhole claims team. And, 3 months later we were told we have a sinkhole. Our windows don't open. Doors open on their own. The upstairs slants. The floor in my sons room has separated from the wall. And we need over $200K worth of grout put in the ground to plug the hole. As I write this, my roof makes sounds like a baseball bat hitting a bat, repeatedly. I didn't make a bogus claim. I am scared to sleep in my house. We probably will never be able to sell it. And there are no guarantees (2. More cracking sounds just now) that the "fix" will work. I wouldn't wish this on my worst enemy. It's a long process to repair. It's scary and it's potentially financially devestating.

May 20, 2011 03:27 PM

#42

Anonymous

Tallahassee Homeowner

I am perplexed by your statement that public adjusters get the money to pay off the house and let the house go into foreclosure. I don't have an attorney or an adjuster. I'm going it alone. Our check is made out to the insurance company and us. I am saddened by your view that struggling homeowners are making bogus claims. It's a scary thing to think that you can pay 50% of your home value to pump into the ground. It's scary to need 700 cubic yards of grout under your house to fill a hole. (can't pin. Limestone is too unstable). What would you do if it was your house?

May 20, 2011 03:34 PM

#43

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

Tallahassee Homeowner, I am not discrediting legitimate claims. I lost my home of over 24 years (that had 50% equity) due to black mold, and a front porch that had dropped a foot due to a sinkhole) thanks to a disreputable public adjuster that was just a birddog to a sinkhole attorney, and a very dispicable insurance company (Tower Hill out of Gainsville), who took advantage of my family and myself at a time when we were very sick from mold toxicity and displaced from our home and all of our possessions, that were contaminated. I spent my life savings trying to save my home unsuccessfully. I am well aware of legitimate claims and tragedies. My life will never be the same and I will probably never recover financially from the loss.

I am talking about those who see a crack in the concrete, file a claim, and get a payout without fixing their homes. Please note that the appraiser who commented #11 had a claim and did extensive repairs. He consulted with me on this blog. Also too, please note # 31, who is still trying to fix their home. Your experience is yours, and is tragic and real.

I deal daily in the aftermath of bogus claims and the fallout from people who try to purchase these homes. Adjusters who go door to door, repair companies that manufacture damage in order to get claims...the new laws go into effect next month. No more blank checks to owners. Your experience was one, and I deeply sympathise. My experience is vast, and encompasses legitimate claims and illegitimate ones as well, which harms innocent people who buy foreclosed homes without disclosure of previous damage. I feel bad for you if you get the grout without underpinning. You have no idea how many people have repeat sinkholes and there is NO EVIDENCE of grout under the home because they cannot control where it goes when they shoot it.

May 20, 2011 04:02 PM

Anonymous

Gardner

I am looking at purchasing a home with a sink hole issue that is not repaired. Our intent is to acquire the home, remediate the sink hole, and fix the home. In your experience, does the home maintain a stigma from a resale perspective. If we were to sell the home in 5-10 years, would we have a problem even though we have had the repair completed by a reputable contractor and geotech engineer.

Great post!!!

Jun 23, 2011 02:04 AM

#45

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

Gardner, thanks for your inquiry and it was great talking to you on the phone. Good Luck with your home search. According to the property appraiser, the stigma is no longer attached to the home when the engineer's report clears it. In reality, the method of repair is critical. As we discussed, it is very important to receive a copy of the original engineer's report before you purchase a sinkhole home, especially the one you were considering, which was unrepaired, just as the one in my post. Sometimes the damage in minimal and questionable,and will be worth the reduced price you can pay if you find the right home. Many people who are smart investors are doing just this, paying cash, and renting the homes out. When they sell, they will do so with owner financing, and the buyer does not mind either because they know what they are purchasing.

Jun 24, 2011 02:03 AM

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

Kim, I am sorry you were not informed. I hope you have sinkhole coverage, and if you need a Public Adjuster to help you with your claim, please feel free to call or email me.

Jul 10, 2011 06:19 AM

Anonymous

Jeanne, this has been a very informative reading.

I currently have a sink hole claim with legit damages. Can I negotiate a cash pay out offer to my lender for less than what is owed in the mortgage (home value is about 180k, I woe 130k) based on sink hole damages of 200k, and pay off the house?

thanks!

Sep 02, 2011 03:28 AM

#48

Jeanne M. Gavish

Jeanne Gavish, Keller Williams Realty Elite Partners - Spring Hill, FL

Keller Williams Realty Elite Partners - CIPS,GRI,S

JC, I have seen this done but only on a short sale. You can send the engineer's report to the bank and make them an offer. Let me know if you have any luck.

Sep 07, 2011 09:46 AM