But along with putting many homeowners' lives on hold, Hurricane Sandy also brought housing sales in hard-hit regions to a screeching halt, highlighting how a disaster can delay or altogether derail real estate activity in affected markets.
Sandy's impact on real estate activity "went unbelievably far," said George S. Wonica, a Realtor based in the New York City borough of Staten Island, one of the hardest-hit regions. (Pictured above is one home damaged by Sandy in the Staten Island neighborhood of New Dorp.)
By outright destroying some homes for sale, the storm sank a number of deals in a flash. Since storm damage to a home can significantly drive down its value, both lenders and buyers have reason to want to put the brakes on a deal following a disaster.
"Suddenly, the loan-to-value ratio of the house will not meet the lender's requirements or the federal requirements" if the home is damaged, said Barry Goodman, general counsel to the New Jersey Association of Realtors. In other words, any harm to the home's value could render the original loan amount to buy the home unacceptably large to a lender or the loan's government backer.
Hurricane Sandy Destruction -- An Epic Storm
Hurricane Sandy Batters Home Sales in Storm-Affected Areas
Rising floodwaters caused by Hurricane Sandy rush into a subterranian parking garage on Monday in Manhattan. Sandy's storm surge was estimated to affect hundreds of thousands of homes along the East Coast.
Vehicles are submerged on 14th Street near the Consolidated Edison power plant in New York. The storm forced the shutdown of mass transit, schools and financial markets, sending coastal residents fleeing, and threatening a dangerous mix of high winds and soaking rain. It ranks high among other recent natural disasters that have destroyed urban areas.
A general view of submerged cars on Avenue C and Seventh Street in Manhattan after severe flooding caused by Hurricane Sandy, with widespread power outages and significant flooding.
Lower Manhattan goes dark during Hurricane Sandy. Power has been out in parts of New York all week and might not be turned back on until the weekend. It may make many consider whether to buy a standby generator.
The town of Long Beach, N.Y., is submerged by the storm. It was one area where homeowners were desperately trying to prepare for Hurricane Sandy's onslaught.
A person tries to cross the street in Atlantic City, N.J., as Hurricane Sandy churns toward the East Coast. The city was like a ghost town, with casinos shuttered, tourists fleeing and many parts of the town inundated in knee-high water.
A home in Manalapan, Fla., shows the severe damage it sustained when Hurricane Sandy passed through. Many homes were left ravaged in the wake of the storm, leaving homeowners worried about what their insurance would cover.
A wave crashes against the shore in Montauk, N.Y., while a person stands on a porch as Hurricane Sandy moves up the coast.
Ocean waves kick up near homes along Peggoty Beach in Scituate, Mass.
Aerial view of the coast in Belmar, N.J., after Hurricane Sandy left widespread damage along the Eastern Seaboard. Homeowners are likely to be turning their attention to how to recover from the storm.
Homes are left destroyed on Highland Street in the Tri-Beach area in Milford, Conn., by Hurricane Sandy. For people in hurriance-prone areas of the country, here's how to hurricane-proof your home.
Waves wash over a ruined roller coaster from a Seaside Heights, N.J., amusement park, after the pier beneath the Star Jet coaster collapsed into the Atlantic Ocean during Hurricane Sandy. New Jersey got the brunt of the massive storm, which made landfall in the state.
Caleb Lavoie, 17, of Dayton, Maine (front), and Curtis Huard, 16, of Arundel, Maine, leap out of the way as a large wave crashes over a seawall on the Atlantic Ocean during the early stages of Hurricane Sandy in Kennebunk, Maine.
Sailboats rock in choppy water at a dock along the Hudson River Greenway in New York.
Waves pound a lighthouse on the shores of Lake Erie near Cleveland. High winds spinning off the edge of Hurricane Sandy took a vicious swipe at northeast Ohio, uprooting trees, cutting power to hundreds of thousands, closing schools and flooding parts of major commuter arteries that run along Lake Erie.
Firefighters look up at the facade of a four-story building on 14th Street and Eighth Avenue in Manhattan that collapsed onto the sidewalk during Hurricane Sandy.
Downed power lines and a battered road is what Hurricane Sandy left behind as people walk off the flooded Seaside Heights island.
Richard Thomas walks through the floodwaters in front of his home after assisting neighbors in Fenwick Island, Del.
People wade and paddle down a flooded street as Hurricane Sandy approaches in Lindenhurst, N.Y.
An ambulance is stuck in more than a foot of snow near Belington, W.Va, in Sandy's aftermath. The storm buried parts of West Virginia under more than a foot of snow, cutting power to at least 264,000 customers and closing dozens of roads. At least one death was reported.
The view of storm damage over the Atlantic Coast in Mantoloking, N.J. Americans sifted through the wreckage of Hurricane Sandy after the storm passed, with millions left without power. The storm carved a trail of devastation across New York City and New Jersey, killing dozens of people in several states, swamping miles of coastline, and throwing the tied-up White House race into disarray just days before the vote.
A woman walks over the flooded streets of Hoboken, N.J., after Hurricane Sandy hit. The storm was one of the largest in history to hit the East Coast.
A parking lot full of yellow cabs is flooded as a result of Hurricane Sandy in Hoboken, N.J.
A 168-foot water tanker, the John B. Caddell, washed ashore on New York's Staten Island from Hurricane Sandy's powerful winds.
Brian Hajeski, 41, of Brick, N.J., reacts after looking at debris of a home that washed up on to the Mantoloking Bridge in Mantoloking, N.J., the morning after Hurricane Sandy rolled through.
Foundations and pilings are all that remain of brick buildings and a boardwalk in Atlantic City, N.J., after they were destroyed by Hurricane Sandy.
This aerial photo shows burned-out homes in the Breezy Point section of Queens, N.Y., after strong winds whipped a fire into an inferno. The tiny beachfront neighborhood had been evacuated before it was inundated by floodwaters, transforming a quaint corner of the Rockaways into a smoke-filled debris field.
A fire fighter surveys the smoldering ruins of a house in Breezy Point. More than 100 homes were destroyed in a fire which swept through the oceanfront community during Hurricane Sandy.
A car is buried in sand that was washed in from Hurricane Sandy in Long Beach Island, N.J.
In this aerial photo, people survey destruction left in the wake of Hurricane Sandy in Seaside Heights, N.J.
Jim Margiotta digs sand out from under his garage door, which was caused by Hurricane Sandy, in Long Beach, N.Y.
This aerial photo shows a collapsed house along the central Jersey Shore coast.
Heavy surf caused by Hurricane Sandy buckles Ocean Avenue in Avalon, N.J.
Cars are submerged at the entrance to a parking garage in Manhattan in the aftermath of Hurricane Sandy. A wall of seawater and high winds slammed into the city, destroying buildings and flooding tunnels.
A woman stands near destroyed homes in the aftermath of Hurricane Sandy in the Rockaway section of Queens, N.Y. The death toll has risen to nearly 100 in the U.S., with 41 in New York City alone.
Boats are piled on top of each other at the Morgan Marina near Sayreville, N.J.
A man walks by the remains of part of the historic Rockaway boardwalk in Queens, N.Y., after large parts of it were washed away during Hurricane Sandy.
Waves break in front of a destroyed amusement park wrecked by Hurricane Sandy in Seaside Heights, N.J.
This aerial photo shows burned-out homes in the Breezy Point section of Queens, N.Y., after a massive fire that was fanned by Hurricane Sandy's winds.
Robert Connolly, left, embraces his wife, Laura, as they survey the remains of the home owned by her parents that burned to the ground in Breezy Point. At right is their son, Kyle.
Andrew Seemar, 13, removes items from a room as he and his mother, Kathleen, clean up after their home in Brick, N.J., was flooded during Hurricane Sandy.
Rescuers bring people out by boat in Little Ferry, N.J., in the wake of Hurricane Sandy.
Olivia Loesner, 16, hugs her uncle, Little Ferry Deputy Fire Chief John Ruff, after she was rescued from her flooded home in Little Ferry, N.J.
The remains of homes destroyed by a fire that swept through the Breezy Point neighborhood in New York City's borough of Queens.
Brian Hajeski, 41, of Brick, N.J., reacts as he looks at debris of a home that washed up on to the Mantoloking Bridge in Mantoloking, N.J., the morning after Hurricane Sandy rolled through.
Virgen Perez, left, and her husband, Nelson Rodriguez, center, look around their home which was flooded by Hurricane Sandy in Atlantic City, N.J.
Johnny Adinolfi is comforted by neighbor John Vento, right, as he stands in what was once the living room of his home in the aftermath of Hurricane Sandy in Massapequa, N.Y.
People take photos of water filling the Bowling Green subway station in Battery Park in Manhattan as New Yorkers cope with the aftermath of Hurricane Sandy.
This satellite image shows the monstrous size of Hurricane Sandy before it made landfall on the East Coast.
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As a result, lenders serving regions that were declared major disaster areas, such as swaths of New York, Connecticut and New Jersey, have mandated that homes under contract be re-inspected for damage. Even sales activity in areas that mostly escaped the worst of Sandy's wrath have been affected, Wonica said.
"Now [home inspectors] have to go back [to those areas] for the banks, and make sure there was no damage, even though they're not near the beach," Wonica said.
Ed Pfaff, a resident of the Staten Island neighborhood of Westerleigh, is one homeowner who hasn't been able to finalize the sale of his home because of the re-inspection directive from lenders. Pfaff, a client of Wonica's, had intended to close the sale of his home in early November. But now the 62-year-old, who plans to move to Florida to retire after the deal closes, expects a delay of at least another month as he awaits the results of a re-inspection of his home.
For the lender financing the purchase of Pfaff's home, asking for a re-inspection made perfect sense. Pfaff said that his home, much to his surprise, emerged unscathed from the storm. But fallen trees smashed into two homes on his block, and "it looks like Godzilla went through Tokyo and knocked down all the telephone poles," he said.
Recently, an inspector went through Pfaff's home snapping photos, but didn't offer an estimate of when the inspection's results would be ready, Pfaff said. "He told me he was very busy," Pfaff said.
Pfaff said that he's confident that the inspection didn't uncover anything that could put the deal in jeopardy.
But if an inspection does find damage to a home, the seller almost always has to pay for necessary repairs in order for the deal to close. Otherwise, the buyer, lender and seller must negotiate a new deal.
"The overwhelming number of times, the seller is responsible for ensuring that the property is in the same condition as when it went into contract," Goodman said. He added that in most deals, a buyer -- and not just the seller -- can push for a last-minute re-inspection.
In addition to fixing any structural damage, the owner of a damaged home under contract must also repair any damaged big-ticket items like gas and electric fixtures, large appliances and the home's heating system, which are all sometimes vulnerable to flooding.
Fortunately for a seller whose home is under contract, damage to neighboring properties usually doesn't affect a pending deal. Even if a toppled tree demolishes the home across the street, or a storm surge swamps the one next door, it shouldn't matter, Goodman said.
That's because in the event of a disaster a lender or buyer usually only asks for a re-inspection, not a reappraisal, Goodman said. Unlike an appraisal, a home inspection only evaluates the home itself, and does not take into consideration those around it.
Goodman noted that both buyer and lender do have the right to ask for a re-appraisal, however, but that following events like Sandy, re-inspections are much more common.
But if your home was up for sale when a disaster struck, and you didn't have any offers on the table yet, then you're in a dicier situation.
As the foreclosure crisis has made abundantly clear, neighborhood home values suffer from any proximity to derelict properties. So if a storm wrecks the roof of a neighboring home, another home in the community could have its value negatively impacted, at least temporarily. For that reason, Goodman said, a homeowner should wait until a neighborhood recovers before attempting to sell a home.
"The reality is that they can put the house on the market, but they'll get a diminished value before the neighborhood is cleaned up," he said.
And it goes without saying, New Jersey Realtor Val Nunnenkamp said, that a seller whose home itself was damaged should mend the property before marketing it.
"We had to temporarily withdraw them from the market to get water out of basements and fallen trees off property," Nunnenkamp said of some of his clients' listings, which are spread across southern New Jersey.
A severe storm such as Sandy may also taint a property's value by revealing its vulnerability to flooding, Goodman said. "Suddenly this area that had not previously flooded now may be declared a flood zone."
Such a designation could chip away at the value of a property or make it less appealing to buyers, who could be required to pay flood insurance by a mortgage provider. However, Goodman said, it's unlikely that a buyer could pull out of a pending deal due to the revelation that a home is vulnerable to flooding -- unless the seller failed to disclose that the home was in an area that had already been designated a flood zone.
Ariel Dagan, a Realtor with Keller Williams Realty in New York City, who serves sellers in Manhattan, has a client who may have to lower the listing price of her lower Manhattan apartment in recognition of the home's vulnerability to storm surge. But a decision to tweak the price of the home would only come after his client pays for thousands in repairs to the property.
Worth millions and just recently renovated, the apartment had its basement flooded with 8 feet of water during Sandy -- right before the owner was about to list it, Dagan said. Tens of thousands of dollars in furniture must be replaced, he said, and the basement has to be gutted.
Those repairs will take a bite out of his client's wallet, he added, since flood insurance is "not something that's really preached in New York City."