My Days Are Filled with Flood Plains in RI Real Estate
This is a broad statement but remember I live, work and market in the ocean state, Rhode
Island. What I do is market and sell coastal, water view and waterfront real estate here in little Rhody. So yes, my days (and nights) are filled with flood plains and their impact upon the RI real estate properties I market and which my buyers want to buy.
It is of paramount importance to understand the current flood plains, X (low risk flood zone) to VE (high risk flood zone) zones, in order to price property properly with a home seller before listing a RI home for sale.
Since many of the coastal RI property sales have slowed down in volume due to the new FEMA flood map changes, it is important to gather the information that home sellers, in high risk flood zones, need to know. Only then can property pricing correctly be made. It is a moving target right now with insurance costs. However, there are changes in my marketing stance in listing coastal RI homes now, as follows:
– elevation certificate must be received prior to listing any home for sale in a flood plain. It is the first question a sales agent or a home buyer asks of the listing agent.
– is it a preferred risk property? meaning the present homeowner has maintained flood insurance on the property before the flood maps changed giving them a cost advantage that can transfer to the new homeowner. On primary residences the flood insurance increases will be 18% a year, on vacation or investment homes the flood insurance increases will be 25%. These increases will occur until the amount is reached for the flood cost for a property owner who did not maintain flood insurance on their property. An insurance agent can obtain a quote on what that dollar amount is.
– know the full cost of flood insurance for the property prior to listing
– let the home seller know that the true market value of the property is lower if you are in a ‘VE’ or ‘AE’ flood plain. Pricing of the home must reflect the ‘now’ value and is expected to be discounted by buyers if they are to consider the house affordable to buy. How much of a discount is the point of discussion between seller and real estate agent.
– grandfathering of flood insurance is not guaranteed for the future owners (which makes flood insurance affordable now) of the property. Coastal home sellers need to understand that the flood insurance they are able to pass on to buyers is dependent upon whether they maintained flood insurance on their property.
Those of us who have been dealing with the waterfront home sales in recent months (since the flood changes occurred in October 2013) are realistic to know that the reprieve given to the Biggerts-Water Act for homeowners may change. The Homeowners Flood Insurance Affordability Act of 2014 is delaying the flood insurance increases for now putting the responsibility for sorting flood insurance back on FEMA. We wait, analyze and continue to sell stunning homes on the Bay and on the ocean.
No guarantees on flood insurance long term costs can be given to any buyer. But complying with required home structural changes required by the Coastal Resource Management Council and local town building codes now will lessen the cost of your flood insurance. It will cost more money to live along the beautiful shoreline now. Talking with structural engineers and coastal builders on how best to make your home last through the next century should be a worthwhile endeavor. Especially if you want to keep it in your family to pass onto children or other family members.
Ensure you understand that self insurance on a home (that has no mortgage) is an option if you have no fear of the waters. Work with a real estate agent that truly represents your interest in any buy or home sale and can guide your through these new waters. If I can be of help to represent you, please give me a call at 401-529-7849 today. Yes, I count flood plains like most people count sheep!