UPDATED: May 23, 2023
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Just hearing the word “flooding” is enough to make some homeowners’ hearts skip a beat. There’s always the chance that a broken pipe or a busted washing machine can suddenly turn life upside down.
If you live in a high-risk flood zone, the chances of having to deal with water damage are even greater. That’s why it’s important to know what it will take to protect yourself from flooding before you buy a home, and to give prospective buyers full disclosure if you sell your home.
A flood zone is a geographic area that the Federal Emergency Management Agency (FEMA) has defined according to varying levels of flood risk.
FEMA classifies two main flood designations: Special Flood Hazard Areas (SFHA) and Non-Special Flood Hazard Areas (NSFHA).
The zones you want to be most aware of are labeled with the letters “A” and “V.” These are the highest-risk areas, and they include coastal and riverside communities. They’re also known as Special Flood Hazard Areas (SFHA).
If you’re considering buying a home in either at-risk zone, keep in mind that there’s at least a 25% chance you will experience a flood over the life of a 30-year mortgage.
Minimal to moderate zones are considered Non-Special Flood Hazard Areas (NSFHA). They’re labeled with the letters “B,” “C” and “X.”
These areas are not as dangerous even if there is a small chance of flooding caused by nearby bodies of water or heavy rainfall.
Odds are that if you’re selling your home, you know whether you’re in a flood zone. But if you’re house hunting and aren’t sure whether the house is in a flood zone, there are a few ways to find out before it’s too late.
You can first ask your real estate agent if the home is in a designated flood zone and about any flooding history. Or, if you do your own research FEMA has an online Flood Map Service Center.
There is a lot to consider when deciding where to live. If you happen to find your dream home in an area prone to flooding, there is even more to think about. Let’s take a look at some key factors to consider before buying a house in a flood zone.
If you’re considering buying a home in a zone with the letters “A” and “V,” keep in mind that there’s at least a 25% chance you will experience a flood in the next 30 years. Does that mean you should be concerned every time you see rain in the weather forecast? Not at all. You can protect yourself in many ways, from installing a backup battery for your sump pump to ensuring that your homeowners insurance has you covered in the worst-case scenario.
Looking at classifications, maps and stats is all well and good. But once you know where a home stands, chances are what you really want to know is what the flood insurance will cost you. Not surprisingly, the cost in A and V zones is much more than in the lower risk areas. In these areas, homeowners are required to have flood insurance.
The average rate is $700 per year, but those in more flood-prone areas could pay over $1,000. It’s also worth noting that many mortgage companies will require buyers to pay up to 12 months of their flood insurance upfront, due on closing.
In the moderate flood risk areas, designation B, you’re not required to purchase flood insurance. But that doesn’t mean it’s money down the drain if you do. The National Flood Insurance Program reports that up to 25% of their claims come from these areas, and suggests all homeowners get flood insurance.
Depending on what mortgage lender you decide to go with, they may or may not require you to have flood insurance. If your property is in an A or V designated flood zone, then Fannie Mae, Freddie Mac, FHA loans, USDA loans and VA loans all require you to have coverage. If you get a non-conforming loan, you might not need flood insurance but it’s probably still recommended.
Selling a home in a flood zone may not be so easy. Home buyers may not fully understand what being in a flood zone entails, whether it’s worth it to take a chance on the home or if they should avoid your house entirely.
Let’s take a look at some things to consider before selling a house in a flood zone.
It’s crucial to keep in mind that classifications change over time. The last thing you want is to find out that your low-risk home became high-risk after you’ve already listed it on the market.
Keep up with the status of your area to make sure you have the right insurance, and take measures to shield yourself from costly damage and repairs. In a worst-case scenario, you’ll be glad you did.
It’s critical that you’re transparent with a potential buyer and include any downfalls about the property in your Seller’s Disclosure. If you had previous flooding or major water damage in the past and you’re upfront about that, the buyer will trust you more.
You don’t necessarily need to steer clear of A- and V-classified areas, or list your home the moment you’re mapped into one. The benefit of having these assessments is that they allow homeowners to be proactive about natural disasters.
You can get excellent flood insurance to cover property damage, and you can adapt your house so that it’s less vulnerable. For example, people in coastal communities can raise their homes out of the floodplain as a precaution.
Home improvements can make houses in high-risk places more appealing in the market. HomeAdvisor has a list of preventative measures you can take. Other homeowners in the area are likely taking the necessary precautions that buyers are looking for in their future home.
Whether you’re in a flood zone or not, it’s always a good idea to price your home accurately. But when it comes to listing your home in a flood zone, buyers will want to see that you’ve taken that information into account.
As a seller, you need to be honest with potential buyers about the property’s flood risk and how high water could impact the home. Include anything from septic back-ups to how much water could potentially enter the home.
Have an honest discussion about insurance or updating options. Let them know upfront if there’s a flood risk. If the buyer is getting a mortgage, they’ll find this information out during the mortgage process anyway, so it’s best not to potentially kill a sale by omitting any of it.
As a buyer, you need to understand the extra costs and risks associated with properties in these areas. But remember, B, C and X areas can also flood, so don’t let a high-risk flood zone scare you away from your dream home by the water – just take the necessary steps to make sure you’re covered.
Are you ready to buy or sell your home? Get started with Rocket HomesSM and begin working with an expert real estate agent in your area.
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