NEW YORK (Reuters) – Dina Anzalone thought buying her first home would be one of the most exciting experiences of her life. That is, until Superstorm Sandy struck a month before she and her husband were set to close on a house in the Rockaways, Queens.

Located blocks from the ocean and the bay on a thin peninsula of land that makes up the coastal community of Belle Harbor in the Rockaways, Anzalone’s prized colonial home with “old world charm” was inundated with 12 feet of seawater that filled the basement to the ceiling and a few feet of the first floor.

“My husband and I struggled,” said Anzalone, who ultimately decided to move forward with the purchase of the home worth around $750,000. “People think we’re absolutely crazy.”

Throughout the New York metro area, Superstorm Sandy left behind difficult decisions for prospective buyers and sellers of damaged homes on the market.

Some buyers have decided to move forward but now must negotiate how repairs will be completed. Others are reneging and looking for escape clauses in their contracts. Realtors are taking inventory of their listings in flooded neighborhoods, while banks are sending appraisers out in droves to re-evaluate homes in the wake of the storm.

For the last eight years, Anzalone has rented in Brooklyn’s Bay Ridge neighborhood with her husband and their 3-year-old daughter. Now, planning to go ahead with the purchase of the home in Rockaways, she expects home insurance premiums to rise 10 to 20 percent, and she is working with an attorney to negotiate with the seller to make necessary repairs.

INSURANCE DECISION MORE IMPORTANT NOW

Other buyers in contract have decided the risks are not worth closing the deal.

Richard R. Rodriguez, a real estate attorney who represents Anzalone, is helping two other clients try to escape from contracts on homes that were damaged.

“Everyone has the same concern: the neighborhood,” and how it will recover, said Rodriguez.

In one case, Rodriguez said he plans to use a clause in the buyer’s contract that required the deal to close by the end of October, just two days after Sandy hit. The buyer will most likely lose a few thousand dollars by walking away, a cost Rodriguez considered “not bad.”

Attorney Jay Freedhand is representing a buyer who planned to close on a nearly $2 million home last week in Far Rockaway. But after the city’s Department of Buildings deemed the house severely structurally damaged, the buyer wanted to renege. Freedhand is now looking for outlets to stop the sale stemming from the city’s damage classification.

“We don’t know what that legally means,” said Freedhand. “We need to figure out exactly what the government order actually means. That part is unprecedented.”

In hard-hit Hoboken, New Jersey, contracts began fraying shortly after the storm moved inland, even on homes that were not damaged by the storm. Gene Cordano, director of sales for Halstead Property in New Jersey, said he lost three deals in contract.

“They decided they didn’t want to deal with the possibility of flooding in the aftermath,” said Cordano, who said he considered the loss “a blip on our radar screen.”

With some New Jersey residents dislocated by the storm, Cordano said he expects to see available housing units quickly filled.

“The question being asked going forward is, ‘Did this building flood during the hurricane?’ And that will be answered by, ‘yes,’ in many cases,” Cordano said.

Of the roughly 140 properties listed in Hoboken, an estimated 56 percent were flooded or otherwise damaged in the storm, Prime Real Estate Group Co-Chief Executive Officer Jesse Halliburton said.

“There is definitely going to be a time period when consumer confidence is going to be lower and less likely to make a quick decision,” Halliburton said.

“It’s crossed my mind that property prices could drop,” Halliburton said.

Robin Shapiro of Robin Shapiro Realty said the sand drift against her own home in the Rockaways was 3-feet-high the day after the hurricane. After digging out, Shapiro said she fielded calls from real estate flippers looking for cheap deals, but Shapiro, who still lost two deals in contract after the storm, did not foresee prices would significantly decline.

“There are only so many oceanfront properties,” she said.

Jonathan Miller, president of the real estate appraisal firm Miller Samuel, agreed buyers will continue to idolize beachfront properties, but a sobering effect on the market, should there be one, would most likely come from lenders and insurers.

“It’s going to come down to cost and access to credit. Lenders right now are essentially afraid of their own shadow. They are looking for reasons not to lend,” said Miller. “Even if a home has flood insurance, lenders may be wary and look for a reason to not issue a mortgage.”