Marshall Fire Rebuilding Time Line
As a Realtor, what I’m hearing is it is going to take time to rebuild following the devastating Marshall fire that destroyed or damaged over 1,000 homes in Boulder county.
Time. For those displaced, it likely feels like Molasses, dragging along. I see friends on Facebook who have lost their homes and are struggling for a sense of normalcy. My heart breaks for those that have lost their home. I want to blog more on resources and expectations for our community – so check back often for updates!
The one thing I’m hearing again and again, is it will take time to rebuild. Three to five years sounds like a good expectation. 3 to 5 years. That sounds like a long time. Where will someone displaced live during that interim? And does insurance pay for that? Some policies do offer temporary rent or an ALE.
ALE Additional Living Expense
On a recent and very informative Boulder Longmont Realtor Association webinar, gained some helpful insight into resources for Marshall Fire victims. One conversation topic: an additional living expense, or ALE. Typically home owner insurance policies are written for twelve months, but can go as long at two years.
This living expense can cover an owner’s displacement cost. Some insurance companies may renegotiate something like this – so don’t be afraid to ask. Consider also that your alternative housing might truly be alternative.
The best advice for Marshall fire victims rebuilding or moving away, “Don’t Rush.”
Say, instead of renting an apartment, will your insurer allow you to use their funds to buy an RV? Then you could live in your recreational vehicle for a few years while your Louisville home site is cleaned and your house rebuilt.
Insurance Pay Off and Keeping My Existing Mortgage
Before the fire, I never would have thought of this. You can opt to keep your mortgage if you are planning to rebuild. Why? Maybe you have a 30 year note at two and a quarter percent. Rates are dramatically higher today. And apt to be in a different league 3, 4 or 5 years from now.
So, keeping your existing mortgage with a very low payment might make the most sense. This does mean you’ll be paying a mortgage on a non existing structure during the rebuilding phase following the Marshall Fire.
It also means the payoff you receive from your insurer is apt to be held by your mortgage company.
Insurance Checks Cut To Owner and Mortgage Company
Standard practice, if you have a mortgage, is for the insurance company to send a check payable to you and your mortgage company. If you are keeping your mortgage and rebuilding, it would be common to receive 1/3 of your funds immediately, a second 1/3 as you start reconstruction and then the final 1/3 (less 10%) at completion. With the last bit being turned over once the insurance company ascertains that the rebuilt house is absolutely, 100% complete.
Note, even if you are getting a hefty payoff, you may find you need a construction loan to make your rebuild happen. So getting your insurance money in several tranches might not be an issue.
But, you can always opt to pay off your existing mortgage and then take 100% of your insurance settlement in full to use as you desire to rebuild (or move) your home.
For those victims of the Marshall Fire rebuilding, the choice is yours whether or not to pay off your mortgage. Keeping the low rate might be in your best interests.
Public Adjusters And The Marshall Fire
One of the most helpful tidbits in the BOLO zoom, I learned about Public Adjusters. You want to find one that is licensed. Instate is much better than some carpetbagger coming in from out of state. Scammers are out there, so do your research.
A reputable public adjuster might receive 7 to 15% of the net payout to a Marshall fire rebuilding insurance claim. But, maybe that still nets you far more more funds than you would have received on your own. After all the adjuster knows what to ask for, what things costs, how to most maximize your policy.
Something to keep in mind if you are not going to rebuild. Your tap fees continue to have value. They run with the property. So you are not merely selling a vacant lot if you take the insurance settlement and move on. You are also selling the utility tap fees.
Property Taxes For Marshall Fire Rebuilding Victims
They say death and taxes are inevitable. Sigh. Property taxes are still there for victims of the fire. Let’s start with the bad news.
For damaged homes, Boulder county property taxes do not change this year. Your 2021 tax bill due this Spring remains the same. The assessor will readjust property values for 2022 and 2023.
I have a client with a damaged property in The Ridge at Superior. It is too much damaged to actually live in the property right now. The tax bill is not going down, even though the town house is not currently habitable. Adding to the woes, the Marshall fire rebuilding and cleanup plan for that community is being overseen by the HOA. So owners have to wait for all units to be assessed. And then the cleanup is being performed by one contractor.
You can see that owners or renters will be displaced, income down for landlords and yet taxes due in full. No fun.
Slightly better financial outlook for home owners.
Marshall Fire Destroyed Houses
Again, so sorry for victims of this fire. Feel I have to say this, I’m really truly sorry and the devastation is almost akin to what you see on tv of a war zone.
I’m digressing here, sorry. I’ve driven down McCaslin between The Enclave to one side and the Harper Lake community on the other. It is surreal. There is a never ending smell of burned stuff. At night, it gets uncannily dark where there should be lighted homes.
Let me get back on the subject: Taxes.
For owners of destroyed houses, the State of Colorado pays the property tax on the value of your house, but you pay the portion of the tax from the land. And although it is now an empty lot (or will be soon once cleanup is completed), the rate is based upon residential which is 6.95% (vacant lots are generally taxed at 29% in Boulder county).
If you are rebuilding your home following the Marshall forest fire, you can expect to have this discounted tax rate in 2022-23-24, maybe even to fiver or six years out depending upon your timeline until rebuilt.
Boulder Real Estate News For Fire Victims
Keep checking back. I will be adding additional helpful blogs and resources for victims in our community. Or reach out if you have a question and I’ll do my best to get it answered.