Understanding Risk of Loss—How Severe Weather Affects Real Estate

Chuck--Minor damage can be negotiated along with the rest of the agreement but as damage becomes more severe it can become difficult. Glad to hear you are getting offers though...good sign for the Twin Cities market!

Gary--I know and appreciate that you are one who likes to look at life in a positive light...But as you know we must advise our clients on the unforseen. Storm damage is just one of those unanticipated events where everything can either be renegotated or cancelled by the buyer in MN.

Vickie--I am very glad not to be in an area where hurricanes are an issue!

Mana--Thank you...I always appreciate your comments.

Lynda--Interesting point...I do know that one of the four homes in pending closed on Friday a few days after the storm. I wonder if the financial package had already been in place for the closing so there was no last minute approval on the file. Personally, as I look at the damage, I would want a structural engineer to assess my home if I lived anywhere in that particular development...and if I was buying in an area with such significant damage, I would request the same prior to closing. With so much inventory out there, it would be a tough decision to move or not move into such a hard hit area. It almost would be a relief if someone such as the bank stepped in to remove the pressure of the decision.

Gary--It certainly is a catch-22 for sellers as new siding or a roof could enhance the sales aspect but the home takes a hit on the CLUE insurance report. Plus with so many people with damage timing of repairs good take time. Hopefully we have seen the worst of the storm activity but the forecast is calling for more unsettled weather in the next few weeks.

William--I cannot speak for the rest of the country but this is by no means the worst tornado seen in MN. In 1965 there was a huge tornado in Fridley that was significantly larger than the one that hit Hugo. We generally see more straight line winds and hail in MN than tornados but it seems to be cyclical. According to the news this morning, we are in a similar weather pattern to 1965. There were a few years in the 1970's that also were like this. Our colder than normal spring is part of the problem. Once that jet stream gets up to Canada where it belongs, things should settle down for us. I for one hate the unpredicability of severe weather like we are seeing but can deal with it every 20-30 years or so.

Lynn--Thank you! I do know of agents who have glossed over the boiler plate page of the purchase agreement. Some buyers and sellers are at a loss as to what to do in the situation not realizing it was already discussed at the time of the purchase agreement and the buyer gets to make the decisions as to whether the agreement will move forward if there is damage. This little clause will be coming into play a lot this summer!

Jean--Thank goodness the total devestation of property was localized and very rare in our area too. But we do get some storm damage every year so the risk of loss clause is an important one to revisit every so often.