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How Fires Impact Property Values

How Fires Impact Property Values

As wildfires occur more frequently each year, many homeowners are wondering how fires impact property values.

As you probably guessed, the news is not good. Fires impact local property values in an almost uniformly negative way.

In fact, it doesn’t matter if your house actually burned or not, the value is still likely to go down if you are just in the area of a wildfire.

For instance, a recent study published in the Journal of Forest Economics indicated that property values in a community that was located two miles from a wildfire burn zone dropped by as much as 15% following the fire.

Again, these are properties located two miles away from a burn zone – they didn’t suffer fire damage themselves but still saw their property value decrease by an average of 15%.

Another study, this one published in the Journal of Real Estate and Economics reported similar bad news for homeowners. The study said nearby house prices fell 10% after a first wildfire and then fell again by almost 23% after a second fire in the area.

That’s right, if you live in an area that is hit by wildfire two times you can expect your home value to plummet by approximately 23% following the fire.

Home values go down after a fire

For those wondering how fires impact property values … the evidence shows that again and again those values van be expected to decline.

It makes sense, usually after disasters real estate prices in the area drop quickly. The simple truth is nobody wants to live in an area struck by a disaster. That’s why prices for properties that make it through the disaster unscathed still drop.

They are, in effect, guilty by association.

So if your house has been burned in a fire or is located in an area where a wildfire occurred, what can you do to determine your home value?

The first step is to repair the fire damaged house.  Talk to your insurance agent and then hire a good contractor to repair the home to its previous state.

Once the home is repaired you can then have an appraiser come in and value it.

What is a home appraisal?

A home appraisal is a process that involves an expert physically inspecting the property. The actual appraisal can take anywhere from approximately fifteen minutes to several hours, depending upon the size and complexity of the housing involved.

After the initial inspection of the property the appraiser spends time touring through the neighborhood or area.

The purpose of this tour is to search for comparable sales (other properties that are similar to the property being appraised) that have sold within the last year or so.

This is where your home value could really be dinged as local homes likely aren’t selling for the amounts they did before the fire.

The appraiser completes the report at his office after the field work is finished. The report can consist of a short form report (typically fewer than ten pages) to a long narrative report which can sometimes exceed a hundred pages.

A short form report usually takes between three to six hours to complete. A narrative report can take weeks or sometimes even months, depending upon the complexity of the assignment.

How should you select an appraiser to assess your home value?

Look for an experienced appraiser with a good track record in your area. In addition to offering home and real estate appraisals top appraiser also commonly offer additional services like expert witness testimony and appraisals for trusts, divorce, estates, probate, taxation issues, PMI Removal and more.

Common designations and credentials possessed by top appraisers include MAI, SRPA, SRA and ASA.

Knowledgeable real estate appraisers know when property values will rise – or decline – because they study real estate market conditions. By selecting an experienced appraiser with a solid reputation you can help:


  • Ensure your home is priced correctly to sell. An overpriced home can sit on the market for a year or more. An under-priced home may sell quickly, but for potentially far less money that it is actually worth.


  • Determine if you can remove your PMI (Private Mortgage Insurance). With the data in an appraisal report rendered by certified real estate appraisers, the mortgage company will most often remove PMI (Private Mortgage Insurance) with little trouble. Hiring an appraiser to find out if your property qualifies is the first step in removing PMI.


Once you select an appraiser and schedule an appraisal visit, the next step is completion of an Appraisal Report.

Understanding an Appraisal Report

An appraisal is an estimate of the value of a specific property. The appraisal report is a detailed description of the process the appraiser used to reach the estimated value he placed on the property.

Appraisals can be delivered as an oral report, a letter report, a form or a narrative report. Narrative reports are the most complete appraisal format. A typical narrative report will contain the following sections and information:

An introduction

Which establishes the appraisal’s purpose and to state any limitations that may exist

A factual descriptions section

Which may include: photographic identification of the property; area, city, neighborhood and location data; zoning and taxes data; site data; description of improvements; and history

A data analysis section that includes the appraiser’s opinions

Items in this section may include: market analysis; highest and best use of the land, as though vacant; highest and best use of the property, as improved; land value; sales comparison approach; income capitalization approach; cost approach; and reconciliation of the value indications to a final value estimate

An addendum

That contains a detailed legal description; detailed statistical data; leases or lease summaries; and the appraiser’s qualifications

Reading an Appraisal Report

Each part of an appraisal report should have a distinct purpose and should add to your understanding of the basis for the value determination.

Sections should build on one another and point to the same conclusion. In the last portions of the report, information for adjustments and reconciliation should be drawn from earlier sections.

Looking to Sell a Fire-Damaged House?

We Buy Fire Damaged Houses pays all cash and buys burned homes in “as is” condition. Selling to us can be a quick way to move on from a fire and get on with your life. Simply fill out the short form below to see if your house qualifies for a free, no-obligation quote.


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