Tropical Storm Harvey Appraisal Solutions

My accountant says I need an APPRAISAL of my property to show a loss for the IRS. Can you help me?  YES, WE CAN.

LOSSES AGAINST INCOME

This will require two appraisals. One appraisal will value your property as it was in its pre-flood condition. Think – the value the day before it flooded. The second appraisal will value your property in its after-flood condition. Think – the day after the flood. These appraisals are a normal part of our normal daily business and are not particularly complicated. We can do them now or later. There is no real hurry. Get your important stuff done. Get your lives back together. Call us anytime. We can do these appraisals whenever you are ready.

How can we appraise the home as it was the day before the flood? We did not see your home before the flood. You describe it to us. If you have any pictures, maybe from holidays or events, show them to us. Again, this is regular business for us. We know you are stressed and have many things going on all at once. Let us do our job and take care of this part for you. All you have to do is call us so we can start making your lives a little better.

APPRAISAL FOR BUILDING PERMITS

We can do appraisals that aid in the building permit process. Do you need us? That depends. Read below to see which group you fall into.

  1. If your home is NOT IN A DESIGNATED FLOOD HAZARD AREA, the process to get a permit to rebuild is the same as before your home flooded. You SHOULD NOT NEED AN APPRAISAL to get a building permit. However, you may want us to do an appraisal to claim your uninsured losses against your income for the IRS. See LOSSES AGAINST INCOME.
  2. If your home is IN A DESIGNATED FLOOD HAZARD AREA and YOUR DAMAGE IS MINOR, it is likely the process will not be much different than it would have been before the flood. You SHOULD NOT NEED AN APPRAISAL to get a building permit.
  3. If your home is IN A DESIGNATED FLOOD HAZARD AREA, and your home has been deemed to be SUBSTANTIALLY DAMAGED, the process to get a permit to rebuild your home will be different. What is substantially damaged? Substantially damaged is defined as a home where the cost of restoring the home to its before-damaged condition would equal or exceed 50 percent of the contributory value of the structure before the damage occurred. Generally speaking, your cost to restore your home will likely be limited to a dollar amount not to exceed 50 percent of its before-damaged value.

How is the “before-damaged” value determined? The building code defines the “before-damaged” value to be the same as the “contributory value” of the “improvements” before the flood. This value can be determined in two ways. 1. As defined by the appraisal district or 2. As determined by an appraiser licensed or certified by the state of Texas. That’s where we come in.

The permitting department will defer to your tax statement for that value. Google your county appraisal district. If you are in Harris County, it is www.HCAD.org.  Search for your address. Look down the record. You will find your value broken down into three parts.  Let’s look at an example where a home is assessed at a total value of $400,000.

Example

Land value …….                       $150,000

Improvement value …….        $250,000

Total value ……….                     $400,000

The “contributory value” of your improvements in the above example is $250,000. If your home is IN A DESIGNATED FLOOD HAZARD AREA, and your home has been deemed to be SUBSTANTIALLY DAMAGED, the maximum amount you can get a building permit to rebuild your home is 50 percent of $250,000 or $125,000.

Some Houstonians live in an area where their land values are very high. Let’s look at another example also with a total value of the home is $400,000.

Example

Land value …….                       $350,000

Improvement value …….          $50,000

Total value ……….                      $400,000

In this example, the “contributory value” of your improvements is only $50,000. If your home is IN A DESIGNATED FLOOD HAZARD AREA, and your home has been deemed to be SUBSTANTIALLY DAMAGED, the maximum amount you can get a building permit to rebuild your home is 50 percent of $50,000 or $25,000.

I have seen tax records where the contributory value of the improvements is $100. A $50 building permit is not going to go very far towards fixing your home.

As you can see above, the contributory value of your home is a simple math procedure.
It is – TOTAL value minus LAND value = CONTRIBUTORY value of the improvements.

The appraisal districts do very well at the mission they are asked to perform. They do mass appraisals. It’s not an easy job. Are they 100% accurate every time? Of course not. Are they correct on your home?  Maybe, but also, perhaps not. Their numbers can affect your ability to rebuild your home. Are there better, more accurate numbers available? Probably. As licensed and certified appraisers, we are not trying to appraise every home in the county. We are only working on your home. The only one that matters at this moment.

If you are having trouble with your building permit because of the “contributory value of the improvements, you may want our help. Call us. 

We understand you are incredibly busy right now. There are many financial and personal decisions you need to make. You are dealing with a lot of moving parts; home and auto insurance companies, adjusters, contractors, etc. We at Brubaker and Associates have been appraising flooded and damaged Houston area homes since Hurricane Alicia in 1983. We were alive during Hurricane Carla in 1961, but we were too young to be appraisers then. Well, most of us anyway.

Let us take some of your stress away. Call us. I’ll bet we can help.

713-464-4666

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Mike Brubaker