Natural Disasters and the Appraisal Industry: What to Expect

Natural Disasters and the Appraisal Industry: What to Expect

The next big storm is set to hit landfall in the U.S. today. After devasting destruction to the Carolinas from Hurricane Florence, Tropical Strom Michael has been upgraded to a Category 4 Hurricane by the National Hurricane Center and is set to hit Florida’s panhandle today. According to Moody’s Analytics, the estimated property damage and disruption from Hurricane Florence is expected to reach up to $22 billion. No news yet on the predicted damage from Hurricane Michael.

Natural disasters, like hurricanes, wildfires, and tornados, can have a huge impact on the appraisal industry. For residential appraisers, the work can increase shortly after a natural disaster, whereas, for commercial appraisers, the work may decrease as business transactions dip as people focus on their homes.

What are Disaster Inspections?

Post-disaster inspection reports and appraisals are critical for homeowners, lenders, and insurance companies. Typically, a report will contain photos of the property, aerial views of the neighborhood, and an in-depth summary of the damage to the exterior of the home. The report should also contain FEMA data, including the FEMA disaster declarations, a disaster map, and any type of assistance offered.


One of the challenges with residential appraisals after a natural disaster is the lack of good comps. Despite the lack of comps, the demand for disaster inspections after a catastrophic event is high. Lenders will require a disaster inspection on any open home loans or refinance loans. After major natural disasters, like Hurricane Katrina, the Appraisal Institute often issues guidelines on how to manage comps post-disaster.

Lenders will also help. They will help determine the date of valuation of a property and whether you should provide an appraisal as of the current date, the date before the natural disaster, or based on your unique knowledge of the marketplace. In cases like Hurricane Harvey last year, there may be environmental issues to take in consideration, like chemical contamination. It often takes time to determine the extent of contamination, but most lenders will help homeowners refinance their homes as needed.

Many lenders and other clients may ask an appraiser to attest to a property’s condition and damage, but it’s important to remember that appraisers should only report what they observe. For example, you can report an observation of “large black spots on the wall,” but not “mold growing on the wall” unless you are a mold expert. Appraisers should also avoid estimating the costs of repairing a damaged property and whether pre- or post-disaster remediation work was done up to code.

Be Prepared

After any natural disaster, there is always a time of recovery and rebuilding. Once all the debris is cleaned up, rebuilding, remodeling, and new construction happen by the masses meaning new loans and appraisals are needed. With a limited number of appraisers in many markets, that means a lot of new work for eager appraisers. Additionally, those who work in the construction industry will also see a boom in jobs.

Natural disasters can hit anywhere and anytime. As a nationwide appraisal management company, ACT Appraisal has helped lenders and appraisers across the country from California to North Carolina with disaster inspections and appraisals post-disaster. Contact us today if you have any questions about our services.


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