Rebuilt Homes Worth Zero? - KXNet.com - Bismarck/Minot/Williston/Dickinson-KXNEWS,ND

Rebuilt Homes Worth Zero?

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In a booming economy and a hot housing market it's almost unimaginable that a completely remodeled house would be worth zero - at least to a bank.

But that's what one family was told when their rebuilt flooded house was appraised, just as they were ready to sell it.

Shaun Sipma has the details behind this flood valley property debacle.

Moving on from the 2011 Mouse River flood has been anything but easy for the Pecharichs.

Through loans taken out with SBA they rebuilt their flooded house and moved back home.

Recently when they added on to their family they simply ran out of room and put their home up for sale.

And that's when the bottom fell out.

(Adam Pecharich, Homeowner) "Recently even had an offer so, that fell through due to an appraisal on this house."

The appraisal listed the Pecharich's home value as zero.

Worthless to a lender because it sits in the middle of the proposed Maple Diversion of the flood protection plan.

(Terri Pecharich, Homeowner) I was completely shocked, I was devastated I really can't even put it into words."

Not able to get financing for the home the buyers backed out and the home they were hoping to buy in Minot is now out of reach.

The appraiser who filed the paperwork, declined to give an official comment on the appraisal stating privacy concerns.

But we talked with other appraisers in Minot who strongly disagreed with the finding of zero value.

And here's where that problem compounds even further.

The zero value appraisal was filed with the Federal Housing Administration or FHA and now by law stays with the property for 120 days.

Minot City Finance Director Cindy Hemphil says this is a deeply concerning issue for the city.

(Cindy Hemphill, Minot City Finance Director) "That homeowner has fixed their home, they've been living in it and the they're paying property taxes, that home has a value. Even if it's in the acquisition that home still has a value when it comes to be acquired."

Because the home was rehabilitated, likely that price would be fair market value.

(DelRae Zimmerman, Brokers "12" Real Estate) "Properties that are not even gutted that are filled with mold today haven't been touched since the flood all have a value and those come on the market they're buyers are buyers willing to pay money for them. So when you have a renovated property, renovated on a scale of one to ten theirs is a 12 and the value comes in at Zero is mind blowing."

Under current FHA rules and regulations a new appraisal can't be done for six months.

Senator John Hoeven says he's taken on the issue.

(Senator John Hoeven, (R) North Dakota) "One of the things we're doing is we're checking with FHA, the Federal Housing Administration to see if they can make an exception under their appraisal rules because recognize that for those homes if they're going to be purchased or bought out at a later date they're going to be bought out at market value."

The rehabilitated homes in the proposed diversions, like the Pecharichs are in a sense a short term housing solution for a potential buyer.

And they're guaranteed a return on the investment for both the buyer and a bank because, if the flood protection plan pans out and the properties are bought out, the owners will be due the fair market value of their home - certainly not zero.

But that zero staring at the Pechariches from their home's appraisal has made their rocky recovery from the flood of 2011 more uncertain than ever.

(Terri Pecharich, Homeowner) "From rebuilding so we can get out of the FEMA trailer to now trying to carry on with our lives and put the flood behind us it's just proven to be even more difficult.

In Minot, Shaun SIpma KX News.

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