Thursday
July 24, 2014

After the Storm

|
-A A +A

After the Storm

Disaster strikes. In an instant, your business and many of your listings are gone. What do you do?

Since 1980, the United States has experienced 151 weather-related calamities where overall damage topped $1 billion. More than 30 of these events have occurred in the last three years, according to the National Weather Service. Real estate practitioners at the epicenter of these events have faced down their fears and persevered to help their clients and their communities. 

Joplin, Missouri—May 2011

Lori Lanier didn’t know whether her real estate office was still standing. On the evening of May 22, 2011, she jumped in her car, and made the gut-wrenching trip through darkened streets from her home in Webb City, Mo., to Joplin five miles away. A tornado had ripped through the city (population 50,000), demolishing 7,000 homes and 550 businesses in just minutes. It also claimed the lives of 161 people, making it the deadliest tornado in U.S. history.

Will you be ready?

Make sure you're prepared for disaster by reading these tips from real estate professionals who have been through it all.

As Lanier closed in on Joplin, debris made roadways impassable, so the broker-owner of Realty Executives Tri-States parked a few blocks away from her office and cautiously approached the center of town on foot. What she came upon was shocking: People were crawling out of windows and rubble. Others wandered like zombies along streets filled with wood and glass, overturned cars, and fallen trees.

When she found her building—or what was left of it—all that remained intact from her office was a credenza with two items sitting on top miraculously undisturbed: a photo of her grandson and her laptop computer.

The next few months were some of the busiest—and stressful—of her 17-year career. Not only was she dealing with the destruction of her office, but there were clients who had lost everything in the EF5 tornado that ripped a mile-wide, 22-mile-long path through the city and surrounding area. Dozens of her clients were desperate to find a home to purchase or rent.

Lanier didn’t want to turn anyone away, She set up a makeshift office in her living room, forwarded her business line to a new cell phone, and used her personal savings to keep her business going amid the chaos.

Not many real estate professionals would have had an adequate emergency fund for such a disaster. Lanier did. When the tornado hit, the 17-year veteran broker says she needed $10,000 just to replace computer equipment and office supplies for her 14-agent office. (She received a $1,500 computer grant from the Missouri Association’s REALTORS® Relief Foundation). “If you’re going to have to lease a new location, that could cost you $6,000 to $8,000 for a deposit and first month’s rent,” she says. To be safe, she recommends keeping $20,000 in liquid savings, an amount that would obviously vary depending on your location and the size of your business.

Dealing with Loss

The financial cushion didn’t remedy the psychological toll on Lanier. “You’re emotionally trying to deal with the tornado yourself, and you hear the story of every client you work with,” she says. “A lot of us had to seek counseling because we felt very much like disaster workers. I may have lost a business, but people lost a lot more, so my loss is kind of trivial in the scheme of things. ” 

The effect of the tornado was felt throughout the REALTOR® community in Joplin—43 practitioners lost their homes and 80 lost vehicles, five lost their offices, four lost immediate family members, and one, Donald Lansaw with Charles Burt, REALTORS®, lost his life.

The Ozark Gateway Association of REALTORS®, which was without power for three days after the storm, had a printed membership list. So the staff, using their only working form of communication, started texting members and kept it up until they’d accounted for all 399 members. They also created a needs list: who needed a ride, who needed prescriptions, who needed dialysis. A group of REALTORS® and staff volunteers took care of those requests, says CEO Kim Cox.

Cox says every broker and REALTOR® association should keep a printed or cloud-based list of emergency contacts. In addition to including everyone within your company, keep information on the local home builders association, Habitat for Humanity, Salvation Army, city housing authority, major places of worship, the Federal Emergency Management Agency, and the Department of Housing and Urban Development.

Joplin benefitted from the generosity of the REALTOR® community, with donations pouring in through the Missouri REALTORS® Relief Foundation and other associations around the country. More than $91,000 was donated, of which $73,000 went directly to the 43 members who lost their homes, Cox says.

The remaining $18,000 was put into a separate fund to be used over time for members’ needs. There’s still about $8,000 available that members can access with an application through the Community Foundation of Southwest Missouri.

As for helping the wider community, OGAR received seven semi-truck loads of material donations and turned its offices into a distribution center for anyone in need. More than 2,000 Joplin residents obtained cleaning supplies, clothes, tools, tarps, buckets, and bins to salvage items.

After getting through the crisis, Joplin REALTORS® faced the tough task of getting back to business. OGAR worked with the local MLS to make changes to listing forms in order to note whether a property was “in the zone” of the tornado damage. Lanier was able to borrow a conference room at a local Edward Jones investment brokerage until she managed to reopen her office eight months later, in January 2012.  And while one might expect that the storm would have immediately leveled real estate sales, the opposite was true. Those who had lost their homes sought to put a new roof over their heads as soon as possible, Lanier says. Home sales burst wide open in neighborhoods that were undamaged. In June 2011, 417 residential units were sold in Joplin with a median price of $105,000, compared to 187 units with an $86,000 median price sold during the prior June, according to OGAR.

But six months after the tornado, business slowed. Houses priced at $200,000 and under, even with a little damage, were being scooped up, Cox says, but high-end homes in the $700,000 range weren’t moving. Some victims who had not yet purchased were waiting for new builds or for homes to go on the market. Those who couldn’t find housing stayed in one of 500 temporary trailers set up by FEMA. The last trailer was removed in October.

By June 2013, Joplin sales were back to pre-tornado levels: 218 total residential units sold that month at a median price of $101,750. But prices have since slipped again; 161 homes were sold in February with a median price of $79,000. “Now we are seeing people trying to sell what they bought right after the tornado and not getting what they paid in 2011,” Lanier says.

The Slow Comeback

In Joplin many retail shops and restaurants have returned, especially along the city’s bustling Range Line Road. Of six schools destroyed, three have been rebuilt, and construction of a new high school is expected to be complete by next year. New-home construction represents a significant portion of the market.

Still, there are still vast tracts of land where homes and buildings once stood. Although pieces of vacant land have been reserved for the city’s master redevelopment plan—mixed-use commercial, residential, and public space—construction hasn’t yet started. Because the city and developer are using federal Community Development Block Grant money for the project, spending has to be approved by an additional administrator, Cox says. The process is slow.

A persistent shortage of rental properties is also a problem for Joplin. Many homes of lower-income residents were destroyed in the tornado and have not been replaced. Those properties were likely underinsured, Cox says. But some new apartment construction is helping to meet the demand.

Today, Lanier is thriving in her new office, not far from her old building. She has 17 sales associates, three more than before the tornado. The effects of the storm are still a factor in her business; she’s working with a number of home owners who bought during the flurry of activity three years ago and are now underwater. The memories of that horrific day remain painful personally. With tears in her eyes, Lanier recalls that she was supposed to be at her office when the tornado hit. An inexplicable instinct told her not to go in. “If that small voice inside you ever says don’t go somewhere,” Lanier says, “then don’t go.”

Lavallette, New Jersey—October 2012

Hurricane Sandy was  1,000-mile-wide storm that touched 17 states along the Eastern Seaboard on Oct. 22, 2012. With Connecticut, New York, and New Jersey in its crosshairs, the storm killed 159 people and caused damage totaling $65 billion. The National Weather Service says Sandy destroyed at least 650,000 houses and left approximately 8.5 million people without power in the weeks and months following the disaster.

Andrea Schlosser’s third-generation, nearly 100-year-old brokerage, Schlosser Real Estate, in Lavallette, N.J., sits on a Jersey Shore barrier island one block from the ocean. Her building was largely spared, with the exception of 27 inches of water in her lower-level anteroom. Initial reports said the island would be inaccessible for six to eight months, but Lavallette got power, water, and sewer back in two-and-a-half weeks. The gas was restored on Dec. 15, and Schlosser reopened two days later.

Neighboring towns weren’t so lucky. Nearby Ortley Beach was almost wiped out, with only 62 homes still standing out of about 2,000, Schlosser says.

“My focus was on getting some sort of normalcy back,” Schlosser says. “I call it the Sandy depression—everyone had it to one degree or another, and I thought it would help to get people back in as soon as possible to try to get past it.”

Even before Schlosser reopened, her son Matthew created a Facebook page where he compiled information from nearby town websites and emergency management officials. With so many towns dotting the Jersey Shore and each with its own -criteria for residents and business owners returning to the island, Schlosser sought to provide authoritative information. She also used her newsletters to provide updates on the damage, local relief efforts, and FEMA flood elevation proposals.

A big worry has been how new elevation requirements will impact flood insurance rates, potentially disrupting property values as well as buying and selling. Schlosser is watching Congressional developments closely since the House passage of a flood reform bill in early March that would curb extreme rate hikes and protect homes from those massive increases if they met code when they were built.

In the first three months after the storm, local sales and rentals came to a halt.  “A lot of lending institutions were hands-off,” she says. “No one knew what the values were going to be, and if they were going to sell, it was difficult to find financing.”

Then, a local lender, Ocean First Bank, became the first to write a loan. The sale closed in January 2013, and Schlosser advertised that news in the local newspapers. She also offered free property evaluations for home owners. “These were the things we were trying to do to get back on track for property owners,” Schlosser says. “We thought it was important to get a sale done as soon as possible after the storm to show that business is still good on the island.”

Schlosser’s efforts paid off—2013 turned out to be her brokerage’s best year ever. Her market share in Lavallette went from 24 percent in 2012 to 46 percent in 2013. “I wanted to give people something, and if I gave valuable information that could help them, it would help build that trust factor,” she says.

Washington, Illinois—November 2013

Four months after an unseasonal EF4 twister destroyed 1,000 homes and four major apartment buildings, killing two people last November, the central Illinois town of Washington (population 15,000) is starting to stabilize.

Mark Helmuth, broker-owner of WRC, REALTORS®, Inc., says February felt closer to normal in the business sense, coming off a buying and renting frenzy in the weeks following the tornado.

On a typical day, WRC takes two or three calls looking for rentals. That spiked to 40 to 50 at the end of November.

Video filmed by Marc Wells of the Nov. 17, 2013 tornado in Washington, Ill.

Because the majority of Washington’s housing stock is owner-occupied, the few rentals that were left were snatched up just days after the tornado. Home owners who were unaffected by the tornado were calling Helmuth’s brokerage to offer up a spare room or basement to displaced victims.

The Peoria Area Association of REALTORS® connected with one of its members who had developed a rental property website, netrent.com, accessible only to REALTORS®. The member opened the site to any landlord, and it quickly became the central location for post-storm rentals. But the demand still couldn’t be met; many residents ended up moving to neighboring towns or are still staying with friends and family, Helmuth says.

In addition to helping people find housing, REALTORS® are helping replace household items. With a portion of the $60,000 in contributions that PAAR has received from the REALTORS® Relief Foundation and others, the group has distributed mattresses, sheets, pots and pans, clothes, and care packages.

As in Joplin, home purchases spiked after the twister, as people with financial means sought to buy right away. With only the clothes on their back, some of Helmuth’s clients were buying sight unseen. “We had more cash transactions in December than I’ve had in 20 years,” he says.

"Inventory stands at half its normal level. Tornado-stricken lots that go on the market are selling in the same week,” he says. “There’s a demand. If home owners decided to buy another home and put their lot for sale, there are people who want to build here and be a part of the community.”

Dallas Hancock, CEO of PAAR, says she expects a lot of movement this spring when people try once again to find housing that better meets their needs.

“I think people rushed to find somewhere to live. Now many find it’s too expensive or difficult to commute, or they took something that was only temporary,” she says. “But this is a very strong and tight-knit community. People here are going to do what they have to do.“

Although Helmuth’s brokerage was untouched, three of his 10 sales associates and staff members lost homes in the storm that also hit two nearby communities. In all, 13 REALTORS® lost their homes, including WRC agent Marc Wells. Wells filmed the twister’s destruction of his home in a terrifying three-and-a-half minute video that went viral on YouTube, garnering more than 1.5 million views by early March. Because he owns about 30 rental properties, Wells was able to move his family and in-laws into two of the homes quickly, but the storm’s ferocity remains fresh in his mind.  “After hearing that sound and experiencing that tornado, I can understand why some people get PTSD,” says Wells.

3
Average: 3 (2 votes)
Your rating: None