It’s a great excuse and the price is usually right to rebuild to your taste. Almost all new construction happens in areas that are newly developed. It’s cheaper to rebuild these houses than to tear down one that’s sold for a price that includes the structure.
Isn't the damage from the fire trucks' water worse than the fire damage ? It's like the whole house going through a very long car wash. Wood, electricity must be wrecked.
That much damage means it's getting gutted to the structure to be repaired anyway. And wood is pretty much impervious to water, especially a one-time thing like a drenching from a fire truck. We build houses in pouring rain all the time, it's not a big deal. Sometimes it adds a week or so to the build time, but frequently it has no effect at all.
If you were planning to gut the place to flip it anyway this is not a problem.