RI Flood areas - any locals know if its a big factor on resale?

Question

I'm wondering the true risk on resale of a RI home in a severe flood warning area (7/10 according to Redfin)?  The insurance is roughly $120/month.  Is there anything else I should be considering?

Tina Rubin · Answer

Thank you all for your responses, they have been most helpful!

Charlie MacPherson · Answer

@Tina Rubin  Flood risk is an automatic turn off for many buyers, myself included.  When I sold residential, I always advised buyers to think long and hard before buying in a flood zone.

Redfin's flood rating don't matter in the least.  The authoritative source is FEMA and you can search flood zone ratings here: https://msc.fema.gov/portal/ho...

Lenders will require flood insurance if your property is not in Zone X.  As of this writing, the maximum payout for flood damage is $250,000.  So if your $1,000,000 oceanfront property gets swept out to sea in a raging Nor'Easter, you can rest secure that you'll collect $250,000!

You might mitigate the flood rating with an elevation certificate, which costs hundreds to obtain.  However, my insurance guy tells me that the most elevation you can gain over the current rating with a new survey is 4 feet, regardless of what the real elevation is.  If that gain is enough to put you above the flood zone or even reduces the rating, you win.

Unless there's something spectacular about the property, I'd be strongly inclined to walk away.

Brandon Ingegneri · Answer

Find out specifically what happened to this property in the 2010 floods.  That is the absolute worst case flooding scenario.  If there was minimal or no impact, it should ease tensions.

Jeff Moore · Answer

I agree with Clinton. As soon as they followed up with realtor we disclosed and unfortunately many prospective buyers declined to pursue any further

Clinton Wilson · Answer

Yes, I believe you can have a risk on resale. A lot of people are scared off by flood zone. FEMA changes the maps every so often which can affect the insurance premium. If the flood insurance is indeed $120, I would share this with buyers upfront. Do not let them find out on their own. I think with honesty, transparency, and education you will be able to move the home.

Jeff Moore · Answer

I can only speak for NJ.  I did one flip in flood zone and many people reached out to my realtor asking if in flood zone and when he said yes a lot of people just walked away

Tina Rubin · Answer

Thank you Clinton. Do you think its a factor to buyers (i.e. let's say when I want to resell the property in RI specifically? I feel that the flood insurance cost of $120/mo doesn't seem prohibitive to me but I am out of state and was curious if on a local level this has any stigma or large bearing in a buyer's decision (other than the obvious cost consideration)?

Clinton Wilson · Answer

It depends on a few factors. First, we have to consider the lender. The lender will have certain insurance qualifications. For example, I have seen people carry both homeowner's insurance and flood insurance. Play close attention to the insurance policy as to what is covered after a potential occurrence, and replacement costs. Just make sure the policy will make you whole again in case of anything.