“If you can’t think of something useful to say, talk about the weather.” Historically, this was sound advice.
No longer the ultimate safe topic, weather discussions have become complicated and not in a good way.
For real estate professionals, talking about the weather may carry an extra layer of complication: legal liability.
In the rush to nail down all the details of offer generation or offer presentation, could casual “ice breaker” assurances like “this sure is not our normal weather” come back to haunt the professional?
Many buyers and sellers–and others for that matter–mistakenly believe that real estate professionals know more about the ups and downs of interest rates than banks. Consequently, real estate professionals must be on the alert to head off misunderstandings. They must be equally careful wording answers and opinions on many topics, so as not to mislead the public, inadvertently or through lack of care.
Is it time for weather and related hazard topics, like wind, wildfires, flooding, and water levels, to be handled with the same care?
• “This weather is not normal” could lead an out-of-town buyer to believe this weather (either very bad or very hot) will not be part of their lives in this location. However, “not normal” has increasingly, become the pattern, occurring repeatedly and annually.
• Could this leave a buyer feeling misled when they move and weather
reality sets in?
• 50-, 100-, and 500-year storms are coming more frequently than those historic time points. In 2017, north New York State experienced record-breaking severe flooding along Lake Ontario. Now, two years later, flooding and property damage appear ready to exceed 2017 levels. How do emerging patterns like this affect the value and practical use of waterfront properties?
• Disaster clean-ups and property reconstruction are barely over when new hazards, often of extended duration and scope, strike.
• Annual short-term weather events like Mississippi River flooding have extended to immobilize vast areas for many weeks.
• Historically-isolated events like tornadoes are combining into serial threats.
• The California Department of Insurance reported that, as of April 2019, insurance claims from California’s Camp, Hill, and Woolsey wildfires in November 2018 already exceeded $12 billion.
How are changing weather patterns going to affect “best places to live” choices and related property values?
• An October 2018 study of the exposure of real estate investment trusts’ (REITs) to climate risk evaluated 73,500 properties owned by 321 listed REITs. Results revealed that, globally, 35% of REITs are exposed to climate hazards including inland flooding (17%), hurricanes or typhoons (12%), and sea level rise and coastal flooding (6%). These hazards can translate into millions in damage. “Hot spots” for damaging weather hazards like New York, Miami, Boston, and San Francisco are also “hot spots” for real estate investment. Real estate professionals will be among those evaluating how this overlap will affect real estate values. Will this pattern reduce tourism and buyer interest in these currently-favored vacation and lifestyle locations, resulting in upset value patterns?
Real estate professionals are not meteorologists, but they aren’t lawyers, contractors, and a host of other professionals either; however, they are responsible for understanding all that impacts real estate value. Real estate professionals work to be clear and accurate about real estate issues they are responsible for.
Their professional intent is directed at not giving opinions or advice outside their responsibilities or control which might unduly or unfavorably influence buyers or sellers:
• Buyers moving into an area unfamiliar to them, will increasingly want details on weather patterns and areas vulnerable to weather hazards like flooding. Where should they get that accurate information?
• Sellers of waterfront property want to understand how their land values may be affected by changing high-water patterns. Who knows the real answers?
• In both cases, property insurance–availability and affordability–is an expensive element which impacts on what buyers can afford, what sellers net from a sale, and what lenders will lend. How much of this knowledge is essential to gaining listings, generating transactions, and to enabling real estate professionals to fulfill their obligations?
• Professionals must know what happens to a real estate transaction if bad weather damages a seller’s listed property or destroys the house after the buyer’s offer is accepted and before closing. Once “long shot” events, the escalation of bad weather makes “don’t spend your commission until it’s in your account” advice worth heeding.
Hurricane Season: Predicting the Unpredictable
June 1 marks the start of hurricane season for the Atlantic and Gulf of Mexico coasts. According to CoreLogic’s 2019 Hurricane Storm Surge Damage Report, that means 7.3 million homes will be at risk of requiring potentially $1.8 Trillion in Reconstruction Costs. New York City and Miami metropolitan areas face the greatest damage risk from storm surge.
“Early predictions from the National Oceanic and Atmospheric Administration (NOAA) indicate a near-normal year for the 2019 Atlantic hurricane season,” reports CoreLogic. The ongoing El Nino is expected to suppress the intensity of the hurricane season to 2 to 4 severe storms from the expected 9 to 15 storms.
“It is essential to understand and evaluate the total hazard exposure of properties at risk of storm surge prior to a hurricane event, so insurers can better protect and restore property owners from financial catastrophe,” said Dr. Tom Jeffery, CoreLogic’s senior hazard scientist.
“Damage from storm surge and inland flooding has proven to be far more destructive than wind in recent years, so we cannot rely on the hurricane category alone to give us a sense of the potential loss. A Category 5 hurricane in an area with few structures may be far less devastating than a Category 1 hurricane in a densely populated area.”
In view of shifting weather patterns, if you can’t think of something useful to say, skip the weather and, instead, listen attentively.
For more on effective communication, visit PJ’s What’s Your Point? Blog.