Floods are threatening Houston’s market, but one agent says now is time to buy

Houston can take solace in the fact that many areas were left unaffected by the torrential rain and subsequent flooding that’s plagued the city in the past two weeks. However, in a recent press conference, Mayor Annise Parker confirmed that where there was damage, it was significant.

As many as 4,000 properties in areas such as Galleria, Cross Timbers and along a number of bayous are estimated to have been damaged by floodwater, Parker said, though any conversion of physical damage to monetary loss is still premature.

“We have begun a property by property assessment, but we are hampered not being able to go into the areas until the waters recede,” she said. “With two weeks of steady rain, the grounds were completely saturated and there’s really been no place for the water to go.”

For the moment, inspections are strictly visual and administered from the exterior.

While the city is dealing with assessing the damage and providing aid – a decision from President Obama and the Federal Emergency Management Agency to approve disaster relief funding should help – the local industry finds itself in a similarly tumultuous situation, as floodwaters are threatening to ruin deals and hinder construction.

Building Delays

“The flooding has slowed the building sector down,” said Tamarah Curtis, a top producing Realtor with Creighton Realty Partners.

Battling through a gloomy cocktail of mud, rain and flooding, Curtis said that contractors are fighting to try and finish projects according to already established timelines, but delays have been unavoidable. As a result, she added, new construction contracts face a rash of potential terminations.

“We expect to see issues with homebuyers terminating new build contracts due to the new timeframe,” she said. “Some buyers are on very strict timelines that will not allow them to be flexible.”

With inventory wells dangerously close to being tapped, building delays threaten to exacerbate an already serious problem, but Curtis remains confident the flooding won’t translate into more dire shortages. The more pressing issue, she believes, are buyers abandoning contracts because of flood damage.

Why Now is a Good Time to Sell

In Texas, residential sales are bound most commonly by the One to Four Family Residential Contract, or TREC 1-4 contract, which is used for resale properties. With the extensive flooding, the damage allows buyers a loophole to exit the contract without further repercussion.

“Paragraph 14 of the TREC 1-4 contract states that if any part of the property is damaged or destroyed by fire or other casualty after the effective date of the contract, the seller is obligated to restore the property to its previous condition as soon as reasonably possible so long as it is before the closing date,” Curtis said.

In the event a seller fails to fulfill the obligations laid out in the TREC 1-4 contract, buyers then have the option to either: terminate the contract and the earnest money will be refunded; extend the time for performance up to 15 days and the closing date will be extended as necessary; or accept a credit from the seller in the amount of the insurance deductible.

Flood damage throughout the city is likely to result in a number of those scenarios. Agents should make it a point to learn and understand the contract’s language, so they know the appropriate steps to take in the event of an issue.

Fortunately for Curtis, apart from some minor scheduling hiccups, the flooding hasn’t proven too much of a detriment to her business.

“Historically, showings slow down during inclement weather, because of safety precautions, but everything seems to be getting back to normal,” she assured. “The flooding is unfortunate, however, I tell my buyers now is a good time to buy. If ever there was a question on how the property bears water and weather, now is the time to find out.”