Realtor · Schertz, TX · Member since 2015 · 226 posts · 53 votes
I'm looking at offering on the property that is right text to my childhood home. There is a small concrete rectangular channel that separates the 2 homes (it's in a subdivision). Now according to the FEMA FIRM, this ditch and the land adjacent (the 2 houses described above) are in the 100-year floodplain (which i think is ridiculous bc we've had several floods exceeding the 100-year in my life and it has never over-topped...there are steep embankments on either side that help with flood conveyance).
So, the neighbor is looking to sell off market and has given me the chance to offer. I'm wondering if i can use the fact that the property is in the floodplain as a bargaining chip since i would think a floodplain home would be harder to sell to the average homeowner.
My plan is to hold it as a rental, but the flood insurance premium might be a CF killer. Separate issue though...unless there a way to argue with the lender that flood insurance is not needed...fat chance i assume.
Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
8y
@Miles Stanley Yes, in general places in a floodplain are harder to sell, but also depends on your area. Here in VT there are many small streams and many places are in a floodplain.
Selling to an investor is always tougher because you pay "market rate" (owner occupied was less). One of my properties market rate = $2600/year, and is more than my fire insurance.
I have seen people get an adjuster out and if it's proven your property is above the flood plain, the requirement can be removed. This is in Vt where there are a lot of hills, so a house can be near a river but 30 feet above it, so the maps may not reflect accurately. But it's at your expense up front, I believe around $500 or so.
Investor · San Jose, CA · Member since 2017 · 118 posts · 108 votes
8y
I think you're right on both points.
If it is in a flood plane, the mortgage company is going to demand the flood insurance. You can absolutely use that to lower the price of the property, especially given the more intense hurricanes and rain patterns that are predicted. I have a similar situation in Florida. My neighbor and I are both on a lake, but he as a small 1 acre lot that is situated much closer to the water (mines over 70 acres, so I have a lot more flexibility and can get away from the flood plane). When he bought the property, he brushed it off as a '100 year event'. Buyers seem much more aware of flood risks now, however, and they are passing on his property even though he's baking the flood risk into the price. In the end, the property is worth what the market can bring and at the moment the market seems to be sensitive to flood issues. So, while you may be able to get it cheaper, you may have a hard time selling the property later.
If you don't feel this is correct, you could always get it surveyed to verify. Looks like you're going to need the flood insurance, though.