The following guide will discuss the challenges of pricing a fire-damaged house.
You’ll learn what to consider when pricing your property, how to determine a suitable selling price for a fire-damaged house, the cost of fire damage assessment and repair, why you should always reveal fire damage when selling, and the easiest way to sell a fire-damaged property.
Read on to learn everything you need to know about pricing a fire-damaged home.
What to Consider When Pricing a Fire-Damaged House
When pricing your fire-damaged home, there are several factors you should keep in mind:
- Scope of damage: The extent of damage significantly affects how much you can sell your fire-damaged house for. If the house has suffered significant structural damage (beams, walls, electrical wiring, and water piping system), the selling price will be much lower compared to soot damage.
- Cause of fire (fire damage classes): Fire damage categories are based on what caused the fire. There are several categories, including Class A, B, C, and K. Class A fire damage costs are the cheapest while Class K damage is the most expensive.
- Cost of repairs: Restoration for structural damage usually costs tens of thousands of dollars.
- The very fact of fire: Fire-damaged homes have low demand and sell for less than similar homes that haven’t suffered fire damage would sell for. As a result, you may need to price the house below the market rate to attract buyers.
Pricing a Fire-Damaged House
With all factors considered, there are two main ways to determine an appropriate price when selling a house after a fire:
- Get a quote from a real estate investor.
- Hire an agent for a BPO (broker price opinion).
Request Estimates From Investors
Selling a property as is to real estate investors is the most convenient option for homeowners.
However, it may not be the most suitable option for those who want to maximize the proceeds since investors pay less than the home’s after-repair value.
Investors use the Maximum Allowable Offer Formula (MAO Formula) to determine the highest offer amount they can make for your home.
Here’s how you can calculate the MOA:
- Find out the after-repair value and repair costs with the help of a real estate agent and a fire damage restoration contractor.
- Reduce the after-repair value by 30%.
- Deduct the repair costs.
Investors have the capital to purchase a fire-damaged property for cash, cover restoration costs, and run teams of licensed home repair professionals.
As a result, it may cost a real estate investor less to restore a fire-damaged property than the average homeowner.
Note that even when dealing with an investor, you have to disclose fire damage when selling a house to maintain ethical and legal requirements.
Provide key details about the incident, including the date, cause, and severity of the fire, as well as the repairs and restorations done.
Order a BPO (Broker Price Opinion)
Some homeowners may choose to sell a fire-damaged house traditionally (via a realtor) or advertise it for sale by owner. In this case, you determine the price of the house in two ways:
- Hire an agent and get a broker price opinion for about $50 to $300. BPOs are less accurate than professional appraisals because agents simply conduct a CMA (comparative market analysis) to estimate the price of the house.
- Get a professional appraisal and inspection with the help of an agent or by yourself for a more accurate price estimate. Hiring an appraiser costs between $300 and $600 while inspection fees range between $200 and $500.
What Are the Costs Associated With Fire Damage Restoration?
The fire damage restoration cost depends on many factors, including:
- The extent of damage: This includes the structural damage caused by the fire as well as damage caused by the water used to put it down. Depending on the affected parts, the price ranges between $4,000 and $50,000.
- The fire category (Class A, B, C, and K): Class A fires are caused by common combustibles like paper, wood, and cloth. Damage restoration costs range between $8,000 and $14,000. Class B and C fires are caused by flammable liquids and electrical/wiring issues, respectively, and range between $12,000 and $20,000 in repair costs. Class K fires are kitchen fires caused by fats and oils, and cost about $11,000 to $18,000 to repair.
- The size of the house: On average, fire restoration costs range between $4 and $10 per square foot.
- Location: Some states have higher repair, legal, and insurance fees than others. For example, the cost of fire damage restoration in California starts at $10 per square foot, while in Texas the price drops to $4 to $7 per square foot.
Other costs include:
- Appraisal costs for about $300 to $600
- Inspection fees of $300 to $900
- Legal and local authorities fees: fire restoration projects of any size require approvals from several entities, including your insurance company, mortgage lender, the fire department, and local building authorities. You will be responsible for any costs associated with your disaster recovery plan after a fire.
What Is the Easiest Way to Sell a Fire-Damaged House?
The easiest and most convenient way to sell your fire-damaged house is contacting a company that buys fire-damaged properties fast and for cash.
Selling to real estate investors has several benefits, including:
- You can sell without having to endure expensive and time-consuming repairs, including checking what to throw away after smoke damage (here is how long it takes to rebuild a house after a fire).
- Investors often cover closing costs, unlike traditional buyers.
- Cash buyers buy houses fast and with minimum bureaucracy.
- You don’t need to order appraisals and inspections so you can save time.
- Cash sales don’t involve realtors, which means you can avoid high commission fees.
- Unlike traditional buyers who rely on a mortgage and depend on a bank’s approval for financing, cash buyers don’t need a mortgage and don’t depend on a lender. This saves you time and headache.
That said, you have to find reliable cash buyers who specialize in fire-damaged properties. Most investors are only after homes that need minor repairs. But we aren’t.
We have a nationwide network of investors who specialize in buying fire-damaged properties. Request a cash offer via our website and get up to five offers from investors in your location to choose from.
In addition to selling for cash, there are other ways you can sell a fire-damaged house. Read about them in our article on how to sell a house after a fire.
