How does the threat of a big storm affect real estate sales?
This has turned out to be the Year of the Hurricane and, even though none have scored a direct hit on this area, we’ve had plenty of the “fringe” activity from the storms. That led us to wonder:
“It had an immediate impact on our sales. Our model/sales centers were closed due to power outages and the danger of venturing out. Pending contracts were not finalized because the customer was focused on caring for family. One buyer withdrew their reservation because they couldn’t deal with the effort of putting their existing house on the market after going through a weekend like we did. Sales agents are distracted and find it difficult to focus. I do believe we can recover after everything settles down and there won’t be any long term impact as long as we don’t have another hurricane!”
- Linda Mathis,
North Florida Builders
“I observed a drastic slowdown in buyer activity as Hurricane Frances approached Florida. Showings at my listings were non-existent the week before the storm. The early prediction showing Frances pointed straight at us got everyone focused on hurricane preparations and evacuation. In spite of the threat, I did secure one new listing last Thursday.”
- Paul Gruenther,
Watson Realty,
Jacksonville Beach
“The storm has certainly slowed down the ‘lookers’”.
- Judy Hicks,
Re/Max Coastal Real Estate
“I call it rest, worry and pray time. Sales come to a halt and that’s okay. The fear of all the life loss and property loss is very real. And, you know you are not in the north anymore...for certain.”
- Jenet Cattar,
Cattar Realty, Inc.
“In my case, I had two groups of people, one with a travel schedule to deal with and one with family arriving for the holiday, in part to see their intended purchase, both of whom had to see properties on Friday when schools had been closed and some of my sellers were boarding up and evacuating! Other than those two, the only other action we saw from Friday through Tuesday [the day after Labor Day] was an occasional message asking how much a house was [as they drove by, perhaps enjoying the air conditioning in their car]. The general anxiety level was not conducive to house shopping. And being the big tennis fan I am, I wonder if part of the reason for the lack of activity was the nearly all-day coverage of the U.S. Open! We had the same outage as others here at the beach - from midnight to the following mid-afternoon... some trees down [several of which were dead anyway]. It was sort of a miserable time, but weren’t we lucky?”
- Clare Berry,
Berry & Co. Real Estate
“Just like in sales, a major storm can have profound complications for managed rental properties as well. In property management the relationship with landlords and tenants is an ongoing relationship that continues over the years and does not end with a closing. The vast majority of the owners reside out of state and they all want to know, now, if there is any damage to their property. When there is damage to a property, the property manager is looked upon to handle any damages as if we have roofers, electricians, landscapers, carpenters, etc. at our call even if the tradesman are slammed with the vast amount overall damages to properties. A professional property manager can have as many as 150 listings, which usually means they are dealing with 150 pairs of owners, 150 pairs of tenants and throw in a few hundred vendors as well. I say this as a property manager in Jacksonville; can you just for a minute imagine it from the perspective of a property manager in say Vero Beach, Orlando and across the middle of the state? They are dealing with issues of structural damage that tenants may or may not be willing to pay rent on, or move outs because of damages, and owners that cannot make their mortgage payment due to the loss of rents, coupled with repairs that have to be made. Those are the folks that have I have empathy for along with the sales people that their market is ‘Gone with the Wind’.”
- Wayne M. Jones, Watson Realty Corp.
“I believe that hurricanes Charley and Frances could have immediate and long term effects on real estate in the Northeast Florida area. With relatively few hurricanes hitting Jacksonville in recent years, we as Realtors have been able to tell clients that Jacksonville is somewhat safe from these storms. This has all changed after Frances passed though our area and Charley blew though southwest and central Florida. Although only a tropical storm when she when through Jacksonville, Frances caused wide spread damage to property and the economy. Buyers who are moving to Northeast Florida by choice will think twice about their decision to relocate here. With all things equal, buyers may take a closer look at other warm climate areas such as Arizona and Nevada where severe weather is not common. Those opening or relocating a business to the area my also consider other areas. Although there are business incentives to relocate to Northeast Florida, these may be diluted when hurricanes cause loss of property and revenues do to down times. Just as the war in Iraq and Afghanistan have caused increases in building materials, hurricanes damage will cause similar increases. I feel we will see some increase in new home prices and of course homeowner’s insurance cost are sure to raise. We will survive.”
- Bob Hawley,
Sid Higginbotham Builder
“This is probably unusual, compared to most Realtors in Jacksonville who survived the hurricane, but as of this date I am still without power, phones or water at my home in St. Johns County. Rumor is that power may not be restored for three to four more days. Even my cell phone cannot be charged at home. My office at World Golf Village was fortunate enough to have power restored as of today, Sept. 10. Since I am unable to do any work at home, I am in the office trying to catch up after we have been closed for several days due to the hurricane. Needless to say, Hurricane Frances has slowed down business. Customers who had prearranged to visit and look at property have canceled. But there are others who plan on keeping their appointments so the weather doesn’t stop everyone. Today I have had several calls for information and many questions about the weather, of course. The good news is that my team and I are working on several real estate transactions that began before Hurricane Frances hit our area so we are busy and we continue to get a lot of calls from many people throughout the country who are interested in property, despite the weather.”
- Diana R. NesSmith, Davidson Realty World Golf Village
“I would agree these storms are no fun! When a major storm approaches, buyers generally stop in their tracks until they can see if, when, and where. The bottom line is, when no one is interested in looking at real estate, it affects our personal income. You’re not making money if no one is writing contracts. Your numbers are going to reflect that at the end of the year.
“Also insurance becomes an issue because insurance companies stop writing homeowners’ policies when a major storm approaches. Closings are delayed because the buyers are not able to purchase coverage and of course sellers aren’t able to increase their coverage either. I recommend that if there’s a potential problem and repairs, escrow the insurance proceeds.
“Lastly, just the watching and waiting of the storms and delaying of closing dates can be very stressful, so know emotions are running high. Try and take that into consideration as you’re trying to get the deal closed.”
- Kim Davis,
Ponte Vedra Beach Realty
“It has slowed the sales. Some people are waiting for the next storm to pass. It’s also a positive the ones that are traveling are seeing our area and are very interested. Mother Nature has a way for us to trim the trees and make the waters clean.”
- Diane Ward,
Century 21 A1A Realty
“Well! It really puts a double wammy on us. We have to help absentee owners take care of their properties, along with checking on our own properties. Anything that was scheduled to close during or after the storm has to be revisited by the appraisers to make sure that there was no damage, then sent to underwriting. If they have not already gotten insurance then we have to wait out any other storms to bind coverage. This storm will postpone most closings by one to one and a half weeks. It happened to quite a few agents in our office. After the storm, we are flooded by calls checking on listings and future closings. It’s been quite busy, with existing business. As far as new business, it is amazing how buyers just keep coming into town, looking for their own piece of St. Augustine.”
- Teresa Mercurio,
Re/Max 100 Realty
“Storms affect people’s plans by causing cancellation of appointments. After the storm there is the challenge of getting people back on track and rescheduling, but this is not easy as some people had made plans months in advance, so it takes quite a bit of thought to figure out when they can come again. There is always a small percentage who feel, they want to rethink relocation to Florida. It definitely affects sales, when we get hit with consecutive storms one after another, but things will settle down once we get past the hurricane season and we start getting back to normal.”
- Brenda Perkins,
New Homes Realty
“I am sure we can all agree that this has been an unusual year as far as our weather is concerned. I do not see the storm or hurricane situation affecting sales to people that know the area well and, perhaps, already live in the area. I do, however, see an affect on sales to people living outside of the area who are buying here, particularly those buying for investment purposes. I believe the media, nationally and internationally, has painted a picture of serious devastation throughout the state, and this has frightened some investors away or, at the very least, has made them think twice about pursuing the purchase of property here. The storms have also affected the ability to obtain insurance and there is a fear of increased rates for insurance. So far, our little part of Northeast Florida has been blessed. We can only hope that this blessing will continue.”
- Sue Ann Ogden,
Suncastle Properties, Inc.
“Since the buyers kind of ‘hide’ till the storm[s] blow over you make yourself ‘busy’ by sending letters to past customers, post cards to communities, treating past customers to lunch or a visit. Make it a point to do something to get through the ‘dry’ spell. Plant the seeds and the flowers will bloom later!”
- Kathy White,
Re/Max Professional Group, Fernandina Beach
“Insurance or the lack thereof regarding Hazard Binders. I had three closings set for the week of Frances. One was for vacant land, so no problem. The other two fortunately already had their coverage in place before the ‘box’ closed. But it could have been really tough. This week I had a closing set for today. The buyers were unable to get a binder at all last week, thanks to Ivan. Fortunately, a window opened up on Tuesday and they were able to write one. But it sure put a lot of stress on the seller’s decision to go ahead and pack up and begin moving.”
- Mary Yates, Re/Max Professional Group, Inc. Fernandina Beach, FL
“At this time most of my customers are still moving forward with looking at property. However, if our area starts getting direct hits we may be affected more. The biggest concern is trying to get insurance when you have a closing.”
- Josie Deal, Coldwell Banker Jasinsky & Associates
“The biggest way it affects me is delays in insurance binders to close pending sales. Additionally, we may have to add a physical inspection after the storm if the appraisal was done to insure no damage.”
-Brad King,
Branch Banking
and Trust Co.
“Sales slow because showings stop. Everyone is frozen on The Weather Channel. When the threat becomes a reality, sales are slowed during and after the storm. Fallen trees and flooded yards and power outages don’t make our job any easier.”
- Tom O’Connell,
Watson Amelia Island
“High winds and heavy rains are a great time to do a home inspection! Prior to the recent storms, both buyers and Realtors alike called the office to ask if we could still inspect, the answer was a resounding yes! Inspecting during a heavy rain gives us an edge in answering most of the ‘what if’ questions from buyers. If the roof does not leak today, it is unlikely to leak in the near future, if the yard does not flood today, it is unlikely it will flood under normal conditions. Most ‘what if’ questions tend to center on weather or flood issues. The only real restrictions to inspecting during storm conditions are inspector safety. If the wind blows the inspector off the roof, there may be a delay in writing the report, likewise if a power line falls on him. If it becomes clear that the inspection date selected will be just to dangerous, try to do the inspection before the storm. This gives the buyer a clear before the storm picture and may help the seller to document post damage condition, should they be challenged by their insurance company. Aside from that, the only issue for us is clearing roads and getting power on so that you can start selling more houses!”
— Wally Conway,
HomePro Inspections
“I think there is no better testament to owning a home than when a storm approaches and you know you are in a sturdy residence, rather than an apartment or other rental property where you don’t control the storm preparation measures. It is comforting to know that should I choose to board up my home, I can do so to ensure the integrity of the structure rather than waiting for a superintendent or landlord to take necessary precautions. In relation to sales, I now plan on emphasizing the new code requirements that may not have been a selling point prior to this busy hurricane season, now may become a critical component of our marketing. I sure would like to know that the home my client is thinking of buying has hurricane clips in the rafters and wind tolerant windows! As with any business, preparation is critical. We need to communicate to all potential homebuyers to ensure they secure homeowner’s insurance in advance of any approaching hurricane or tropical storm. And if flood insurance is not required, suggest it anyway. It is a small price to pay to insure your home against rising waters. This experience was a perfect time to test out my hurricane preparedness, not just for my home but also for my business.”
- Phyllis Staines,
Re/Max Coastal Real Estate