This is not information about buying or selling a home but this information is important to make sure people don't end up wasting their hard earned money.
When the floodwaters recede, they often leave behind damaged cars, and that's where trouble can begin for used-car buyers. After the owners of damaged cars settle up with their insurance companies, vehicles are sometimes refurbished and resold. And sometimes, a middleman buyer intentionally hides a car's history as a flood-damaged vehicle through a process known as "title washing" and sells it to an unsuspecting buyer in a state unaffected by the disaster. Electrical and mechanical problems can potentially surface later — long after the seller is gone — leaving the new owner with an unreliable car and no recourse against the seller.
Serious floods have affected several regions of the U.S. in recent years, including the devastation that Hurricane Harvey brought to Southeast Texas and Louisiana in the summer of 2017. Estimates of the number of cars flooded by Harvey vary widely, with some sources putting the number of cars potentially lost at 500,000.
In the wake of disasters such as Harvey, state motor vehicle registries "brand" cars that have been inundated by flood waters. Such branding changes the car's title to a salvage or junk title, which alerts future buyers that the car was declared a total loss by an insurance agency, either because of a serious accident or a number of other problems. A flood title specifically alerts future buyers that the car has damage from sitting in water deep enough to fill the engine compartment.
Roughly half of the vehicles with salvage titles are resold often in places where the flood never hit. The sale of flood-damaged cars happens most often in private-party sales than on dealer lots. Reputable dealers use vehicle history reports to check cars they are offered so they can avoid such problems.
Check the Vehicle's History
Car shoppers should follow that example. A history report will detail the vehicle's past, including the states in which it's been registered. A vehicle history report should reveal any branding for flood damage, even if someone has washed the vehicle's title by moving it through states with differing regulations.
A good, low-cost starting point is the free flood title check from Carfax. It will only answer whether the vehicle had flood damage reported, but it also provides a link to buy the full-fledged vehicle history report. The National Motor Vehicle Title Information System, operated by the Department of Justice, has a number of reports you can buy from third-party companies, but they do little beyond what the free Carfax check provides. Your money is better spent toward the purchase of a full report from either Carfax or AutoCheck. And as with any used-car purchase, the buyer would be wise to have a mechanic check out the car.
How to Spot a Flood-Damaged Car
In addition to getting a vehicle history report, here are some basic tips from the National Automobile Dealers Association that will minimize the risk to used-car buyers:
1. Be alert to unusual odors. Musty or moldy odors inside the car are a sign of mildew buildup from prolonged exposure to water. It might be coming from an area the seller is unable to completely clean. Beware of a strong air freshener or cleaning solution scent since it may indicate the seller is trying to cover up something. Run the air-conditioner to see if a moldy smell comes from the vents.
2. Look for discolored carpeting. Large stains or differences in color between lower and upper upholstery sections may indicate that standing water was in the vehicle. A used car with brand-new upholstery is also a warning sign since a seller may have tried to remove the flood-damaged upholstery altogether.
3. Examine the exterior for water buildup. Signs may include fogging inside headlamps or taillights and damp or muddy areas where water naturally pools, such as overhangs inside the wheelwell. A water line might be noticeable in the engine compartment or the trunk, indicating that the car sat in standing water.
4. Inspect the undercarriage. Look for evidence of rust and flaking metal that would not normally be associated with late-model vehicles.
5. Be suspicious of dirt buildup in unusual areas. These include areas such as around the seat tracks or the upper carpeting under the glove compartment. Have an independent mechanic look for caked mud or grit in alternator crevices, behind wiring harnesses, and around the small recesses of starter motors, power steering pumps and relays.
According to Fraud Guides, if you suspect a local car dealer is committing fraud by knowingly selling a flood car or a salvaged vehicle as a good-condition used car, contact your auto insurance company, local law enforcement agency or the National Insurance Crime Bureau at 800-TEL-NICB (800-835-6422).
Of course, the best advice when trying to avoid a flood-damaged vehicle is the adage you've heard so often: If a deal seems too good to be true, it probably is.
To find a dealership that knows how to treat shoppers right, please visit Edmunds.com's Dealer Ratings and Reviews.