Nov
16
2011

What is a sinkhole home worth and what is the insurance companies responsibility for my lost value?

Q: What value loss to the real estate with the advent of a sink hole. The physical aspects ?may be? cured, however there is a stigma placed on the property. So what is the value loss and what is the responsibility of the Insurance company to cure the loss.

It is undeniable that once a home has been confirmed to be affected by sinkhole activity, the home has lost significant value. Generally, we have seen that un-repaired sinkhole properties will lose somewhere around 80% of their value. I have seen homes purchased for $600,000 to $800,000 sell in the $100′s following sinkhole discovery. As a side note, there is one small way for homeowners to use this to their advantage. Take the report confirming sinkhole activity to the local property appraiser and have them re-asses the properties value. This in many cases can cut your yearly yearly tax bill by 50% or more. Little consolation I know

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but every bit helps. When you combine a horrific housing market with an additional huge drop in value due to sinkhole, it is usually too much for a homeowner to overcome. If a home is repaired the value will typically increase but how high is the question. It is so hard to predict how a potential purchaser will react to the news. Are they happy to know the problem was repaired and therefore more confident to buy or are they terrified that a sinkhole claim was filed at all to the point where they won;t even consider buying the home? No one really knows.

Insurance companies in Florida are not required to reimburse homeowners for lost value to their home. The insurance policy is a contract that simply is meant to pay for the repairs. In a vacuum, once a home is repaired it should be worth market value again. We all know this is not the case. When sinkhole cases go to trial a jury is not even able to consider the lost value when determining damages. It is a cruel reality of the laws we work with it and is patently unfair but, until the law changes in favor of the homeowners (I’ll pause now for everyone to laugh at that thought) there is not much we can do other than make sure the homeowners receive the best repairs they can.

8 Responses to “What is a sinkhole home worth and what is the insurance companies responsibility for my lost value?”

  1. Adelle says:

    I have sinkhole houses all over my neighborhood and that has ruined the value of my home.I have a few cracks around my house and I do not know if I have that or it is just settling that Florida sands have. I think most of the neighbors have lied and gotten companies to lie for them, as one neighbor 2 streets over said they got it unmerited, but we can’t prove that can we? This is why I worry. When my insurance renews next month I no longer am covered. What if I really do have sinkhole problems? Then they are mine to lose totally.
    And if out of 256 homes, we have had over 40 say they have problems and they all seem to end up with a fancy drive or new pool or something like that, and ALL got a new paint job…then what am I to think? They are either lying or its true.

  2. albert f owens says:

    selling my house…buyers had engineer inspect back deck and engineer determined hollow and sinking underneath and cracking
    on walls…said foundation was safety hazard and had to reduce price by around $6000.. Turned in claim to florida citizens..they sent adjuster but they sent me certified letter stating that their investigation may take many months..the certified engineer made his inspection in october 2011…
    i have sold the house and it will close in about a week…i have incourred a sizeable loss of value in my home..can i sue citizens
    albert owens
    607-738-7823

  3. Jaime says:

    When the insurance company pays the money, do I have to fix the home? i could buy another home and just use this for a rentel or a cheaper fix? Please let me know. I live in Marion county Florida.

  4. Mbarfield says:

    The current statutes in Florida state that the insurance company may at its discretion elect to not pay a homeowner for the repairs until the repairs are actually undertaken. Essentially forcing all homeowners to repair their homes and prevent homeowners from doing what you are proposing. If there is a dispute over whether a sinkhole exists or how to repair a confirmed sinkhole, the claim takes a different turn. In short, to resolve a pending lawsuit typically requires that the insurance company agrees to pay a lump sum. In those situations, I typically dont know, or frankly care, what my clients do with the settlement funds. We settle the case for a lump sum and every homeowner will have their own ideas of what the miney will be best used for.

  5. mike kozak says:

    I have a confermed sink hole,I whant to under pin in addition to the groute repair,but the insurance co ,wont pay.what can i do ,if anything.

  6. Bonnie says:

    Just heard from citizens and we have a sinkhole. They are allowing us 105,000 for repair of the sinkhole if it cost only 80,000 to they only pay that amount or are we given a check for the 105,000. And said they will be back in 2 months to give us a check for the house repairs. What if the money for the repairs is not enough. What do we do.

  7. mbarfield says:

    By law, if you want Citizens to repair your home, it will be required to pay whatever the costs are to finalize the repairs. If during, or after, the repair process it appears that the estimates were short or additional damages occur, Citizens should still be on the hook to pay for those additional amounts even if they exceed the policy limits.

  8. Ted says:

    I have a home with sink hole activity. My insurance company has offered me a cash settlement as soon as they received their engineer’s report.Their offer does not not cover their engineer’s estimate for ground settlement and their estimator’s cost for cosmetic repair.I am preparing a counter offer to cover these estimates. Also is it normal to have to surrender the policy?