What is the impact on the new federal flood insurance act on the value of waterfront homes? You can break these down into two homes; one, homes that have been built in recent years which have been elevated and presently comply with the flood insurance and FEMA guidelines as far as the elevation of their finished floor elevation. The new flood insurance law should not impact your flood insurance premium that much. It may go up some, but there’s not going to be a dramatic impact. The other classification of homes are older homes that were built and either were built pursuant to the old FEMA guidelines, or were built before flood insurance was mandatory, and the finished floor elevation is below the present requirements of FEMA.
With these homes, they are going to, as I understand, grandfather the owners in. So, if you own it, well, you’re premium should stay the same for the first year, and they’re going to phase in the new premium over the next four years. However, if you want to sell your property, whenever someone buys it they’re not going to be able to take advantage of the grandfathered premium, and they’re going to have to pay the new flood insurance premium, and this may cause the cost of flood insurance to be prohibitive. So, that would then limit your market as far as selling to people to cash purchasers on the one hand, and if people don’t have enough money to pay cash for the house, well then you’re in a position to consider doing owner financing. Another alternative, although it may take quite a bit of work and a lot of extra money, is to contact FEMA to see if you can take advantage of the program they have whereby they will pay to reconstruct your house and have it elevated so it is not subject to flooding. Now, whether your home qualifies or not, that would remain to be seen, but there is a program and some funds available to do that.
If you have any questions about selling your home – and I don’t know everything about the new flood insurance act, and Congress is still playing with it – you can give me a call at 727-847-2288. Thank you.