Is it worth buying a fire-damaged house?

When there's a fire on your property, it can lead to months of stress, work, and expenses. If you’re on the hunt for a good deal, you may be wondering if buying a fire-damaged house is worth the added work and money it will take to make the home safe and inhabitable.

If you’re prepared to finance and arrange the necessary repairs to make the home livable, then buying a fire-damaged property can be a great way to get a good deal on a house. But depending on how extensive the damage is, and the costs of fire restoration and repairs services, you may be better off choosing a move-in ready house. 

What to know about buying a house with previous fire damage

Buying a fire damaged house can be a great way to score a good deal, especially if you’re on the hunt for a fixer-upper so you can afford to remodel the home to your liking. But before you go about buying fire damaged property, there are a few important things you need to know about fixing a fire-damaged property.  

Fire damage can be extensive and may not always look like you think it will. For example, you may be picturing smoke damage and charred furniture, but you also have to worry about water damage. When a fire is extinguished by a sprinkler system or a firefighter’s hose, there will be an excess of water, which could lead to a mold problem. Understandably, a fire can also lead to a decent amount of structural damage and plumbing damage. 

Firefighters also use chemicals to put out fires, and when those chemicals leak into the air duct it can cause major air quality issues. When you buy property damaged by a fire, you’ll have to have the ducts professionally cleaned before moving in. Any homes built before the 1980s will also need an asbestos inspection.

A fire damaged home can offer buyers a major return-on-investment since these properties are priced below market value, but it is important to do your research on what it will cost you to make those repairs. If the owner has already made repairs to a home after a fire, have it professionally inspected to make sure no further repairs are necessary and that the home is up to code. 

Can you get a mortgage on a fire-damaged property?

Speaking of being up to code, buying a house with previous fire damage can come with financing complications if the home is uninhabitable. Mortgage lenders will not issue loans for a home that it doesn’t deem safe to live in, so you’ll have to make the necessary repairs first. An uninhabitable home can pose a dangerous health risk to the homeowner and a financial risk to the bank or lender. 

The exception to this rule is when you get financing through a loan program sponsored by the Department of Housing and Urban Development (HUD). You can apply for a Section 203k loan that not only lends you the money to buy the home, but also the funds to repair it and make it livable. These loans are fully insured by the Federal Housing Administration so lenders take on less risk. Repair funds remain in an escrow account and are only released to the contractors once they complete repair projects. 

How does fire damage restoration work?

If you're buying a house with fire damage, here are the steps you need to take to fix it as part of the fire damage restoration process.

1. Damage assessment

A fire damage restoration contractor has to receive permission from a licensed authority that the home is safe to enter. Once they can safely enter the property, the contractor can perform an assessment of the damage — even indirect consequences of the fire, like water damage. 

They will take into account how far flames and smoke penetrated into the structure of the home, as this will give them an idea of how extensive their clean up needs will be. They will also evaluate any belongings in the home for damage to see if they can restore them or if they need to discard them. Once this step is complete, the restoration company can give a better idea of the cost and timeline of the project. 

2. Debris removal

Before the real restoration work can begin, the contractor’s team will secure the property by:

• Fencing it off
• Removing any debris from the perimeter of the home 
• Boarding up or tarping off openings in the structure to protect against weather damage
• Sealing off undamaged areas to protect against cross contamination

3. Water mitigation

As part of fire restoration services, the contractor’s team will need to dry out the home and clean up any standing water left from extinguishing the fire. Before a water extraction crew steps in, the contractor’s team will remove all personal property from the home as well as any damaged components of the home, such as drywall and flooring. 

4. Smoke damage removal

A fire can make quite a bit of mess as it leads to a lot of soot and smoke that can get into every nook and cranny of the house. This is the most intensive stage of fire damage restoration and a lot of manual labor is involved in properly removing soot and smoke damage from both the interior and exterior surfaces of the home. 

Deodorizing agents can help remove lingering smoke smells, and applying antimicrobial chemicals can halt mold growth. Ducts will also be cleaned to make sure there is no residual soot, debris, or smoke in them. 

→ Learn whether you need an air quality inspection

5. Construction and restoration

Last but not least, to wrap up fire damage restoration it is often necessary to make repairs to the home or completely rebuild certain areas, if not all areas. Every home will have different restoration needs from rebuilding the roof, to replacing electrical systems, to adding and painting new drywall. This final step will help turn a fire-damaged property into a livable home again.