Q: I have a home that’s located in a 100-year flood plain and I am planning to sell it. I have never had flood insurance.
Should I get an elevation certificate myself or leave that to the buyer?
How much should I discount my house? And, if I can’t sell it, what can I do with it?
A: You should gather more information about your house, its location in a flood plain, and what effect that has on pricing before you make any decisions about selling.
You can get some information on flood insurance and the risk of flooding to your particular property by going to a FEMA (Federal Emergency Management Agency) website: www.floodsmart.com. You can type in your address and find out your property’s risk of flooding.
The site will tell you whether your property is in a high risk area and the differences between the various risks.
Once you know your risk, you may find out that your risk is high enough to warrant your obtaining flood insurance. You can get more information about flood insurance at www.FEMA.gov.
You should then talk to several reputable real estate agents or brokers in your area about home prices and what effect flood plains have had on home valuations.
Before you have these facts in hand, it’s somewhat premature to automatically conclude that you’ll have to discount the price of your house in order to sell. If your house is in a community that is in the 100-year flood plain, you should be on a par with all the other homeowners.
Once you’re ready to truly price your home, invite several top local agents in to give you a comparative marketing analysis of your home. A CMA will look at prices of homes similar to yours that have sold recently, and should give you a suggested list price as well as a marketing plan for selling your property.
Once you have the CMA and the real estate brokers’ suggested list price, you’ll have a better idea what you might expect to get from the sale of your home.
And you will eventually sell it. While the market has changed from a red hot seller’s market to a more balanced market — where there are an equal number of buyers and sellers — or a buyer’s market, where there are more sellers than buyers, it all comes down to two things — price and the condition of the home. You’ll either have to improve the condition of your property to get your price, or you’ll have to lower your price to something more reasonable.
If you live in a state where you have a “seller disclosure law” that requires you to disclose material fact about the home to your buyer; you should advise the buyer that you believe the home is in a flood plain. You shouldn’t need to purchase an elevation certificate.
As a final thought, insurers have lost so much money paying flood claims over the past few years and buyers purchasing homes in flood plains may have to purchase flood insurance to be able to obtain financing for the purchase of a home.
I have sold several homes in the 100-year floodplain and can tell you what I have learned.
This will impact your ability to sell, and maybe the price. The first thing I would do is look into getting flood insurance. A buyer will need it to get a mortgage. In one case I purchased flood insurance just to make the property more marketable. The only buyers who will not have to worry about flood insurance are cash buyers.
If your home has never flooded that would be a good selling point, if that is true I would play it up.
Knowing the elevation of your home relative to the base flood elevation is important, and an elevation certificate will tell you that. A lot of homes in the 100-year floodplain have floor levels above the 100 year flood elevation. If that is the case it would lower the cost of flood insurance (though not eliminate the need for a mortgage) and would be a good selling point. You may need the certificate to get flood insurance.
You should also look at FEMA’s flood maps to verify that you really are in the floodplain. If you are on the edge or don’t believe you should be in the 100-year floodplain there are ways to appeal and get this changed. I don’t know much about that, with my houses there was no question.
The good news is that homes in the 100-year floodplain are marketable, particularly if you have relatively low cost flood insurance.
Good luck!