Trouble Selling a home in a Flood Zone – Diologue with Client – Private Flood Insurance
Trouble Buying or Selling a home in a Flood Zone – NFIP Vs Private Flood Insurance (many Lloyds of London Flood Insurance)
This article starts off with a very common situation where a homeowner is trying to sell a home and your buyers lenders are saying that the home has to have flood insurance. If you are in this situation hopefully this article will help you understand some options you have (there are always options). And if you would be so kind as to share it on your social we can get the word out to help others. The article when will educate about how to buy or sell a property in a High-Risk flood zone. We will explore NFIP vs Priave Market flood Insurance which includes may LLOYDS of LONDON flood insurance.
Hope you enjoy it if you have any questions reach out.
~ YOUR FLOOD NeRD
Hunter M suggested I talk to you about flood insurance.
We are in a unique situation right now.
We bought our house in 2015 and 5 different places on our closing documents told us that we are not in a flood zone.
Three years later, we are trying to sell our house and every offer we got has fallen through because their mortgage companies are requiring flood insurance.
Our lender had a flood zone search done by an independent company and it came back not in the flood zone.
However, we now know that they made an error because we are 100% in the flood zone and the maps have not changed since 2008.
We are currently in a lawsuit to figure this whole situation out.
Anyways, we are now trying to sell our house again (at a much lower price) and would like to have an estimate for potential buyers for flood insurance.
Hunter said you are the best of the best so I wanted to give you an email and see what you can do for us.
I look forward to hearing back from you.
I would be happy to help you.
Can you help me by filling out the intake form?
So I can start looking at the property?
Link is below
Sorry about the Flood zone issue with your lender and the issue your potential buyers are having. Unfortunately, this is not uncommon.
There are about 70 “independent” companies that service the banking industry providing what is called a Flood Zone Determination (FZD).
What happens (due to federal law) is every loan that is backed by the federal government will contract with one of these companies and they pull the FZD.
If the FZD comes back with the indication that a property is in a highrisk flood zone usually identified with an (A, AE, V, or VE) then the mortgage companies by federal law will have to require flood insurance to get a loan.
As will every industry there are some companies that are better than others.
Every single property that is sold or purchased needs to have one of the FZD research done.
To me, it sounds like your lender is using one that might not be “one of the best” depending on your point of view.
Since there is a discrepancy in the information that they (buyers lender has on the FZD and your’s (seller’s lenders) either one of you can request that your lender do what is called a flood zone discrepancy search. Where you or the seller provide the different FZD to either lender and they review and decide which one they are going to use.
Not overly scientific but is how it tends to be handled.
The other option is to work with FEMA (take many months) and have them decern if the structure is in the high-risk flood map.
This brings me to a very important fact the FZD oftentimes do not identify if the structure is in the high-risk flood zone. So if your parcel is large and a portion of your parcel is in the high-risk flood map but the structure is not then the lender will not have to require flood coverage. Please note that if your structure (even by a corner) is in the high-risk flood map then the whole structure will be required to get flood insurance.
In addition, just because the structure may be outside of the high-risk flood map doesn’t mean that the property will not flood it just changes the requirement for you to purchase flood insurance or not.
The risk is there and you should get flood insurance since you know what the risk is. The good news is you can get flood insurance for really cheap since your structure isn’t in the map. This is usually identified with an (X, B, or C) flood zone.
Since your lender hasn’t required flood insurance some people (I’m guessing you) might think that is lucky.
It’s only lucky if you don’t have water in your home.
However what if you had a flood loss with no coverage?
That would defiantly affect your financial future.
So I would have suggested that you have some kind of flood insurance policy.
Preferred Rate Policy (PRP) – these types of policies are quite reasonable in premium.
Since the buyer’s lenders are requiring flood insurance.
They mush have a different company that pulls these FZD than your lender.
It is good to note that -there are things we can do to convince lenders to accept one or the other FZD but this is a long process, (delaying closing) and all lenders have different practices and procedures to settle these disputes.
I am here to help you with your goals and the goals of your buyers and I would suggest that we see how much a flood policy would cost so we can be armed with that for the buyer as well as for you and your real estate agent to discuss what the listing, or concessions will be.
On a side note, I have found some success with our other real estate partners as a strategy where you give them 1 to 2 years premium to get the “cost of Flood Insurance” off the table when selling.
I have had success with having a policy in place that can be transferred to a new owner this shows potential buyers that the property is insurable for flood insurance and takes that fear off the table.
Some people fear buying a home in a flood zone
Most people don’t understand flood insurance, and some feel as though it means the property has flooded before or that it will.
Only mother nature knows and I pray it never happens to your location.
Anyways both options above are just what I have suggested to other clients and they have had success.
I am not a real estate agent so I can’t really give you advice, just ideas to discuss with your listing agent.
Best Flood Insurance
WE only work in flood insurance it is all we do at my agency, there are very few experts in insurance as a whole (most are a generalist).
Since we only write flood insurance across the nation we can and do shop all options for any given state.
Hunter is too kind to call us “best of the best” but we do get pretty nerdy about flood insurance and call ourselves FLOOD NERDS.
I know we can help you lets start with getting some more information about your property and if you have an Elevation certificate please send that along as well.