Posted by Jim Locker on January 09, 2001 at 08:43:15:
$35K in repairs does not match up with “Damage is quite extensive”. $35K translates into one or possibly two rooms burned out, and probably very little roof damage. By the time the smoke damage is cleaned up, the carpeting replaced, those rooms fixed, and everything painted, you are through that much money.
It could be the owners have settled with insurance and took a lump sum payment. Depending on the policy, the company, and the details, this might have happened.
You can make any offer you want to make. If the owner takes it, well then OK.
I just looked at a house that had had a fire. Damage is quite extensive.
House is listed for $79,900.
If in good shape, it would be around $130,000.
Rough estimate of repairs is over $35,000.
My question:
If the property was insured, would the homeowner have received a large sum of money from the insurance company, so I could make a VERY LOW offer and the owner will still come out ok… or do insurance payments get put in escrow to be paid upon completion of the repairs?
In other words, if the house sells for $79,900, is the homeowner getting paid TWICE for their home?
(I’m thinking of offering $10,000 cash if they have already been paid by the insurance company.)
When you stop to think about it Kim, it’s really irrelevant whether the owner got insurance money or didn’t. You should be approaching the deal from the standpoint of what type of offer makes sense to YOU given the repairs necessary versus the after fix up value.