How Location Within the Flood Zone Can Change Your Home’s Value
Did you know that a property located in a flood zone can change the value of the property?
If your property is located within a flood zone and you are trying to sell your home fast, it is important that you understand how that can impact the process.
To help you on your journey, here is everything you need to know about how a flood zone can change the value of your home.
Types of Flood Risks
There are different types of flood risks that are important to know, when understanding how it may impact the value of your property.
According to FEMA there are three main categories of flood risk:
Moderate to Low Risk Areas
High Risk
High Risk (Coastal)
Flood Insurance Costs
Mortgage lenders require flood insurance for properties located in “high risk” flood zones. However, nearly 30% of all NFIP flood insurance claims occur outside of areas labeled “high risk” which is why it is advisable to have flood insurance in all flood zones just to be on the safe side. The added cost of flood insurance adds to the expense of owning a home in a flood zone.
Possibility of Water Damage
The added cost of insurance is a lot. On top of that, you also have the possibility of water damage to the home will decrease the value of your property for most potential buyers. If you live in a flood zone, this will always be a risk. This will cost you money to repair, but also decrease the value of your property as homeowners are not going to be too attracted to a property with a risk that could be damaging and costly.
Changes in Evaluations
FEMA continually evaluates and changes the areas in the flood plain registry. You need to continually check the registry because if your house wasn’t in a flood plain last year it does not mean it won’t be in one this year. Your home value can suddenly change if your house is included or excluded from a FEMA flood zone map or changes your area’s risk category within the flood zone. Most states require disclosures for houses near a flood plain. Flood Insurance policies can range from $1,000 per year for low risk to $5,000 a year for high risk areas.
Meeting Flood Zone Disclosure Requirements
If your house is in a flood plain you have to meet special disclosure requirements. Some states have “buyer beware” real estate transactions laws where the burden of discovering problems fall to the buyer. In these states the buyer has to determine if the house is in a flood zone and if there has been previous water damage. The buyer’s home inspector can help with this process.
Connecticut requires that the seller fully disclose this information on the Residential Property Condition Report. As a rule of thumb, any fact or information about a property that could affect the price paid and the desirability by a buyer should be disclosed. It may be a key reason why your property isn’t selling, but that' doesn’t mean you should act illegally and not disclose it.
Simply stated, tell the buyer what you would want to know if you were the buyer. You will have difficult situation if your home is a water-damaged home in a flood zone because of the possibility of mold, structural, and electrical damages. But you are not without options. If you have the time and the cash reserves to sell your house yourself then you should contact your state’s government real estate division so they can provide you with all the applicable disclosures forms you will need to sell your home yourself.
If those forms don’t cover everything about your property, then make sure to add it in to the remaining disclosures. If you have the time to sell your house with a Realtor, it will be the Realtor’s responsibility to provide you with the correct disclosure forms. In this case you should tell your Realtor everything you know about your home so everything is properly disclosed, and you cannot be held liable.If you do not have the time or the desire to deal with the water damage repairs or the disclosures, then you can sell your home to a reputable cash buyer.
A Simple Solution to Selling a Property in a Flood Risk Area
You can just walk away from the house with cash in hand. Private real estate investors, like CT Cash Homes, can buy your house As -Is, freeing you from any worries that your water damaged house will come back to haunt you. We here at CT Cash Homes are different than any other buyers. It is our goal to make your life easier by getting you out from under the property that is causing you problems and stressing you out. We can do this by paying a fair and honest price for your house quickly. Contact us today to learn more.
