Tips for Dealing with Floods

How REALTORS® can keep clients’’ heads above water in flood zones.

By Daniel Rome Levine

A knowledgeable REALTOR^® can help save clients from one of the most stressful and soggy experiences of their lives—dealing with a flooded home. Floods are more common than you may think, and knowing the ins and outs related to them will make you an invaluable resource.

When house hunting with clients, Debbie Murray, CRS, examines properties with an inspector’’s eye. “”I’’m always looking for warning signs of flooding,”” she says.

These include stained or discolored foundations and basement walls, and examining the grade of yards and landscaping beds to see if they slope toward a house.

Murray also makes sure her buyer clients get a Comprehensive Loss Underwriting Exchange (CLUE) report on a home to see if there have been any insurance claims for flooding on the property. “”Surveyors can also confirm if a home is in or out of a flood plain,”” she says. And Murray always encourages her buyers to ask questions. “”The best way to get information on flooding is not by asking the sellers, but by asking the neighbors,”” says Murray, a broker with Allie Beth Allman & Associates, in Dallas. “”I’’ve heard so many horror stories related to flooding from other agents that I’’m extra careful,”” she says. Helping clients make sound decisions on issues related to flooding can save them from the hassle and headaches of cleaning up from a flood and the expensive repairs that are often necessary.

Spotting warning signs of potential flooding is just part of a REALTOR’S^® responsibility. Having an understanding of the complex details related to flood insurance, flood zones, and the federal and local rules related to flooding will make you an invaluable partner to your clients, especially if they live in an area prone to flooding.

Troubled Waters

Flooding is the most common and costliest type of natural disaster in the U.S., according to the Federal Emergency Management Agency (FEMA). Ninety percent of all natural disasters in the United States involve flooding, reports the agency. And it’’s not just low-lying areas on coastlines or along rivers that are prone to flooding. Up to 25 percent of the claims that come to the U.S. government’s National Flood Insurance Program (NFIP) come from outside high-risk flood areas.

Communities along the North Carolina coast are prime targets for storms that trigger surging tides and extensive flooding. Linda Rike, CRS, owner and broker of Linda Rike Real Estate in coastal Morehead City, has helped countless clients with flood-related concerns.

Topping the list: flood insurance. “”When people around here buy a home,”” says Rike, “”the first two questions out of their mouths are, ‘‘Is it in a flood zone’ and ‘how much is flood insurance?’”'”

The cost of flood insurance depends primarily on a property’’s location. FEMA keeps track of areas that are at high risk of flooding and designates them as flood zones.

People will pay more for flood insurance in a low-lying area near the beach, for instance, than they would in an area that is at a low risk for flooding. The elevation of a home’s finished first floor also influences the price of insurance; the higher the home is above an area’s base flood level, the cheaper the insurance.

A year ago a man contacted Rike to help him sell his home in a low-lying area near a river. He said he couldn’’t afford to stay in the house any longer because his flood insurance premium was up to $7,800 a year. ““I just about fell over when I heard that,”” says Rike.

His insurance premium was so high in large part because his finished first-floor elevation was just 5 feet above sea level. To make matters worse, he had invested in extensive renovations on the home, which was built on a slab, making it impractical to elevate the house and install a new foundation.

The man was asking $325,000 for his home and was unwilling to come down on the price, as Rike suggested. Rike told him she was sorry she couldn’’t market his property at that price and wished him good luck.

A home’s elevation is such a critical factor in flood-prone areas like Morehead City that Rike always advises her buyer clients to get their own official proof of a home’s elevation, known as an elevation certificate, from a surveyor, rather than relying on one provided by a seller, which could be inaccurate or outdated.

Go Local

When it comes to getting accurate information on flood insurance and flood zones, a REALTOR’S^® best friend is an experienced local insurance agent, says Rike. She relies on just such an agent, whom she says has helped her numerous times.

Being based in the area, local insurance agents stay on top of changes that are made to flood zone maps by FEMA and they are able to navigate the agency’’s Flood Insurance Rate Map, or FIRM, where these zones are published at the FEMA website. Rike also regularly checks these maps online to help stay on top of changes.

The importance of a knowledgeable local helping hand was driven home to Rike about three years ago when she was working with an out-of-town doctor who was buying an oceanfront property. Despite her pleas to get a quote from a local agent, the buyer insisted on working with his own agent. “”Flood insurance is a different animal and you really need to talk to someone local,”” she stressed.

Days later, the buyer came back to Rike wanting to back out of the deal because his agent had told him his flood insurance was going to be $20,000 a year. Rike put the buyer in touch with her local agent and got him a quote for $3,600. The deal was saved. “”Out-of-town agents only see flood zone, but there is more to it than just that,”” she says. “”There are different levels of risk within flood zones.””

To effectively serve clients in high-risk flood areas, REALTORS^® not only need to stay abreast of changes to federal flood-zone maps and regulations, but to changes to local municipal ordinances, as well.

John Feketics, CRS, a REALTOR^® associate with Atlantis Realty in Wildwood Crest, New Jersey, a beach resort town sitting on a barrier island, learned this the hard way.

In late 2013, Feketics and a buyer were under contract to purchase a home just two blocks from the beach, and the client was looking forward to doing a major renovation.

Expecting smooth sailing, Feketics and his client were shocked to learn right before closing that Wildwood Crest’s municipal code had just been changed to get more homes higher off the ground to comply with new flood-zone map updates.

The change stated that anyone making renovations to a property that exceed 50 percent of the market value of the home must add 2 feet of space above the so-called base flood elevation (BFE) height, which in this case was 9 feet. In other words, the lowest habitable floor had to be 11 feet off the BFE.

This now meant that what was originally planned as a renovation would have to be a complete tear down. Thanks in large measure to Feketics’ skillful and diplomatic handling of the situation, the sellers agreed to lower the price of the home and the buyers agreed to move forward and undertake the larger-scale project.

The sale closed in May 2014 and the buyers moved into their newly constructed home about two years later. “”It is imperative that REALTORS^® in high-risk flood-zone areas be aware of changes to new flood-zone updates,”” says Feketics.

Staying on top of all flood-related topics, from insurance to regulations on renovations, will help ensure your clients enjoy a water-free home and reduce the hassle and stress of the experience should they be unfortunate enough to end up one day being flooded.

Daniel Rome Levine is a writer based in Wilmette, Illinois.

Read more about the flood risks and flood insurance.