Nathan Colmer | Van Dyk Group
C: 609.290.4293 | O: 609.492.1511
Buying a home in the LBI real estate market is a major investment and one that should be carefully evaluated. Buying a renovated home on Long Beach Island after Hurricane Sandy can prove to be a great move, but there are some red flags that all buyers should watch out for and basic information they should know before making such an investment.
In September 2012 Congress made substantial changes to the National Flood Insurance program. These changes penalized owners who were not currently at the new Base Flood Elevations. While not all homes on Long Beach Island need to be raised, these changes to the flood policy (and the damage caused by Hurricane Sandy) prompted many homeowners to raise their homes or tear down their storm damaged homes and build new. This has clearly changed the look of Long Beach Island in the following ways:
These changes, on the whole, are extremely positive for the Long Beach Island area and the greater LBI NJ real estate market. It is a common truth that newer homes increase the overall value of a real estate market and with so much new construction taking place, the entire LBI area will benefit. One would be hard pressed to drive down any street on Long Beach Island and not see some sort of redevelopment and investment taking place. Changes to Long Beach Island New Jersey will no doubt create a new positive environment for the real estate market and the enjoyment of everyone on Long Beach Island.
When buying a renovated storm damage home after Hurricane Sandy there are several key questions to consider. Those at the top of my list are:
The first question is a little hard to answer as many homeowners were not present on LBI. That said, every effort should be made to determine the water level. If water entered the home there would have been a "water line" inside the home. In fact, for homes that did not flood but had water in their crawlspace this line is usually still visible. By knowing how much water the home took on you will be able to better determine the MINIMUM renovations that were needed. For example, sheet rock which is semi-porous should be replaced at least one foot above the water line. If it does not appear this recommendation was correctly followed it is a bit of a red flag.
For any renovation of a home, storm damaged or not, the seller should have records of who performed the work. In the wake of Hurricane Sandy on LBI there were a number of "storm chaser" contractors who were in it for a quick buck. It is usually much better if the work performed was handled by local professionals who are still in business.
FEMA keeps track of how much money was paid out to a house. This information follows the house, not the seller, so it is easy to find out if any claims were made and if so, for how much. There are instances of homes that advertised, "No Sandy Damage" when in fact flood insurance claims were filed and paid.
A letter of substantial damage is one of the most important aspects of this list. This letter basically mandates that the house in question be raised above base flood elevation. This is a VERY expensive endeavor usually ranging from $60,000-$100,000 and possibly even more. Some sellers will not disclose this to potential buyers so some background research is always a good idea.
Lastly, an elevation certificate should be requested and investigated. This is the document that determines the current and future cost of flood insurance. by checking this document you can effectively plan for future expenses and ownership costs in the LBI real estate market. You can learn more about flood insurance on Long Beach Island by clicking here.
For a storm damaged home that was gutted and not restored, the custom has been to sell the house in strictly “as is” condition. It is mostly understood that these homes are being sold for land value with little to no consideration being given to the structure on the property. The owners of the storm damaged home most likely have little to no knowledge of the damage that has occurred and therefore property disclosure on storm damaged real estate is limited.
The area of disclosure in the LBI real estate market that should be of the most concern to potential buyers is in the case of homes that suffered little to no visible damage and/or in the case of homes that have been repaired after sustaining damage from Hurricane Sandy. While there are many areas of concern when conducting a home inspection, there are three important points to consider when looking at Property Disclosure, Hurricane Sandy and the LBI Real Estate Market. They are:
Electrical systems are one of the most important, and potentially life threatening, areas of damage from Hurricane Sandy. Many homes on Long Beach Island suffered no interior damage from Hurricane Sandy however they had water in their crawl space. This is the “silent killer” so to speak as in most crawl spaces have electrical wires and junction boxes. This components are prone to corrosion and can cause fire when not replaced. Sadly, there have been many cases of home on Long Beach Island that seemed to be undamaged by Hurricane Sandy only to burn down later due to unresolved electrical system issues.
Mold and mildew is another important consideration when investigating Property Disclosure, Hurricane Sandy and the LBI Real Estate Market…but it must be kept in perspective. To begin with, all homes have some level of mold and mildew inside. This is a simple fact and it is the case not only on Long Beach Island but elsewhere around the country. The mold and mildew that a potential buyer should be concerned with when dealing with Property Disclosure, Hurricane Sandy and the LBI Real Estate Market has to do with improper treatment of wet areas as a result of flooding. If the interior of a house sustained water damage, all wet areas must be dried and treated with the proper chemicals to kill mold. Contrary to common belief, simply putting bleach on a moldy area will not kill the mold. Rather, a proper solution must be applied to ensure that not only the surface mold is killed but also the underlying root that can cause regrowth.
Foundations are yet another key component to consider in Property Disclosure, Hurricane Sandy and the LBI Real Estate Market. Hurricane Sandy was clearly a strong storm and caused damage to many home’s foundations, especially in Cape Cods on a block foundations. As is the case with mold and mildew, buyers and sellers in the LBI real estate market must understand that a certain amount of settling and cracking is normal on Long Beach Island. What is important to be aware of is any serious and potentially undermining damage
Let me begin by saying that not every house on Long Beach Island NJ needs to be raised. This, above all else, is perhaps the biggest falsity concerning House Raising on Long Beach Island New Jersey. FEMA has established a Base Flood Elevation or “BFE” for all properties on Long Beach Island. This is the level above sea level to which FEMA recommends a new house be built to or a house be elevated to should a major renovation take place. The BFE is computed by adding the natural elevation of the ground above sea level with the elevation of the structure. For example:
A house needs to be raised (by order of the town and FEMA) only if a new construction is taking place or the if house was “substantially damaged”. A house is considered to be “substantially damaged” only when the costs of repairs exceed 49% of the replacement value of the structure. There are in fact many locations on LBI where the ground elevation is already at Base Flood Elevation and therefore no additional elevation would be required to meet FEMA’s minimum standard. This of course deals only with the requirement minimum. There is an inherent advantage to a house that is raised up as it will be safer in future storms and flood insurance will be less expensive. My goal thus far is simply to point out that House Raising on Long Beach Island New Jerseyis not a requirement to obtain flood insurance and is not a necessity for all homeowners on LBI New Jersey.