Does Water Damage Decrease Home Value?

Does water damage decrease the value your home? We could just say “you bet!” and leave it at that, because that about sums it up. If, on the other hand, you’re here to find out what you can do to fix it, keep reading. 

Water damage is shockingly common — nearly all basements get flooded at some point, and around 37 percent of homeowners have experienced losses as a result of water damage. Water damage exists in many forms, of course, and you also have to consider its secondary consequences. 

A Look at the Types (or Categories) of Water Damage

According to the Institute of Inspection Cleaning and Restoration Certification (IICRC), water damage within residential properties can broadly be divided into three distinct categories, depending on the nature of the water:

• Category I water damage is damage caused by clean or sanitary water — think an overflowing bathtub, rainwater coming in through a damaged roof, or snow damaging your foundation as it melts.
• Category II water damage is caused by unsanitary water, better known as “gray water”. This type of water damage does not only have the potential to pose a threat to the structural integrity of a home. Contract with it can represent a health hazard. This type of water includes water from a leaking toilet, washing machine, dishwasher, or sump pump.
• Category III water damage involves grossly contaminated water. Sewage, groundwater during severe flooding, and sea water all fall into this category.

Water damage can also be defined by looking at the extent of the damage. 

Class 1 water damage is limited in scope — not only usually to one room or area of a room, but also in that no structural damage took place. Class 1 water damage caused by clean (category I) water would be your best-case scenario. 

Class 2 water damage involves at least an entire room, and also encompasses highly-absorbent surfaces — such as, for instance, wall-to-wall carpets, upholstery, wood flooring, and plywood or chipboard. 

Class 3 water damage comes from overhead sources like sprinklers or the roof. In this scenario, at entire room is damaged from to bottom, and sometimes several rooms. 

Class 4 water damage is the “gift that keeps on giving” — once you take care of the source of the problem, the moisture within the home will take a long time to dry fully, in turn bringing with it an enormous risk of mold and mildew. 

So, How Much Does Water Damage Devalue Your Home?

Minor water damage — category I and class 1 — does not have to devalue your home at all. You are much better off having it repaired in advance (and will even get it fully covered by insurance in many cases) so that you can get the full market price on your property. More extensive water damage can be a nightmare, on the other hand, especially where the water damage has led to structural damage and a mold or mildew infestation. 

Some of the most common causes of water damage — rusty pipes, flat or damaged roofs, and broken gutters — point to an ongoing problem that any home inspector will immediately zoom in on. These problems will be costly and time-consuming to fix, and few buyers are looking for that type of commitment. When they assess how much it would cost to address the issue, they will either continue their search for a new home or make a significantly lower offer. 

Unless you were already in the process of selling your home when you sustained water damage (and perhaps even then), your best bet would likely be to repair the issue. In many cases, this places you in a financially more favorable condition compared to accepting a lower offer on your home.