What to Consider Before You Buying or Selling a Home in a Flood Zone
Lauren WhiteSeptember 10, 2018
Just hearing the word “flooding” is enough to make a homeowner’s heart 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 buyers full disclosure if you sell your home.
So, what’s a high-risk flood zone? Communities that the Federal Emergency Management Agency (FEMA) classify as high-risk have a 1% annual chance of flooding, or worse. Those placed in minimal to moderate classifications have 0.2% chance or less each year. To see which zone a home is in, visit the flood map service center.
Higher Risk Areas
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 river-side communities. They are also known as Special Flood Hazard Areas (SFHA). In these areas, homeowners are required to have flood insurance.
If you’re considering buying a home in either at-risk zone, keep in mind that there is at least a 25% chance you will experience a flood in the next 30 years. Does that mean you should expect to get antsy 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 flood insurance has you covered in the worst-case scenario.
Lower Risk Areas
Minimal to moderate zones are considered Non-Special Flood Hazard Areas (NSFHA). They are labeled with the letters B, C and X.
B is the designation for moderate flood risk. In these areas, you are 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.
Cost of Flood Insurance
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.
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.
Check the Status of Your Area
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 when it’s too late.
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. If worse comes to worst you’ll be glad you did!
Protect Your Home & Investment
You don’t necessarily need to steer clear of A- and V-classified areas, or list your home the moment you are mapped into one. The benefit of having these assessments is that they allow homeowners to be proactive.
You can get excellent flood insurance to cover property damage and you can adapt your house so that it is 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.
What You Need to Know
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 if there is a flood risk. If the buyer is getting a mortgage they will find out during the mortgage process anyway, so it’s best not to potentially kill a sale by omitting any information.
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.