What is Your Flood Zone?
Chances are a buyer knows nothing about the potential flood risk on the home the buyer fell in love with and the one on which an offer has been made. Some real estate agents’ websites may provide a note as to the flood zone for listed properties, but is it accurate? What does the letter for the flood zone mean? If flood insurance isn’t in your purchase budget for your house payment, shouldn’t this be an issue? Standard homeowner insurance excludes flood damage.
The flood zone is noted on FEMA (Federal Emergency Management Agency) maps. These can be extremely difficult to read or find the correct map for the property. The tools are improving. But even if the house/address is located, there is a risk that the flood map is out of date. The maps are not continuously updated, sometimes decades pass before an update. During any year or period of time, the risk of flood can change.
New tools are available to help. One such tool is FloodFactor.com. This rates the risk of flood on a scale of 1 to 10. However, that doesn’t mean there is no risk of flood, even for the best rated property. Winning Mortgage, Winning Home outlines various telltale signs to look at which may impact the specific home you have your eye on.
Flood Zones Change Over Time
Why might a flood zone change? One significant impact is new development. And that development might be miles from the house you just put in an offer for. Do you know where the nearest creek or body of water is from the house? Are you uphill or downhill from the top of the bank? Or are you level with the top of the bank? Development miles upstream can block open areas and green space from absorbing water by adding impermeable surfaces such as concrete, streets, alleys, home foundations and other materials. Leveling land for foundations also changes the ability to slow the flow of heavy rain. In other words, retention and detention of water upstream causes more of it to flow downstream and at a faster rate.
Overall, remember that Zone X is good, but not risk free. Zone A is generally bad. Zone AE is not as bad as Zone A. Even if in Zone AE, home owners may be able to get a flood elevation certificate which can relieve them of the REQUIREMENT to buy flood insurance. But it’s probably not a good idea to skip buying it if the property is in Zone AE. And once you have a flood occur, you may be required to disclose that to the next buyer and impact the price you get when selling your home.
All in all, properties NOT in Zone X should sell at a discounted price to similar properties with lower flood risk and located in Zone X. So if you think you are getting a great price and deal on a home compared to others you toured, look out for the flood zone designation.