It’s vital that you understand ood insurance so you can explain it to buyers and sellers.
BY RAYMOND E. CARROLL, MAI, SRA

The National Flood Insurance Pro- gram (NFIP) can be puzzling and aggravating. It’s probably unreasonable to expect your customers to know about ood risk, but they have every right to expect you to know, and to use what you know to help keep them out of trouble.

Here are some things you can do:

1. BECOME INFORMED.

The Federal Emergency Management Agency (fema.gov) publishes a booklet called “Answers to Questions About the National Flood Insurance Pro- gram.” Reading the rst two sections, “Introduction to the NFIP” and “Flood Insurance Information for Prospective Buyers,” will prepare you for any ques- tion likely to come up.

2. LEARN HOW THE SYSTEM WORKS.

Yes, it’s a government regulatory pro- cess, but it’s one that works. Congress established the NFIP in 1968 and has improved on it several times since. The program o ers ood insurance nation- wide to mitigate the public exposure and the public cost of ooding. The program is adopted and administered locally, through community building depart- ments. Basically, all new construction must comply with building codes that specify minimum oor elevations in identi ed ood zones. To make the system work nationwide, ad valorem tax assessments were identi ed as the default metric for establishing the building value. Of course, the tax assessment is not a reliable indicator of value, and assessments were never intended to be used the way they are by the NFIP. Prop- erty owners have alternatives to using the tax assessment, and NFIP literature suggests independent professional ap- praisals as the best alternative. The tax assessment is not the nal answer.

3. QUALIFY YOUR PROSPECTS.

If your prospects are looking at existing homes with remodeling or additions in mind, be prepared to assist with referrals to architects, contractors and appraisers experienced in the FEMA permitting process. A nonconforming structure is not necessarily an old struc- ture. Changes in the methodology of modeling the ood plain (and resulting changes in the ood maps) have already reclassi ed as “nonconforming” some buildings constructed as recently as the early 2000s.

4. KNOW WHERE TO GO FOR INFORMATION.

Most communities keep building eleva- tion certi cates on le, and often that information is available through a city or county website. Many MLS systems include a link to ood maps. The o cial FEMA ood map service center can be accessed at msc.fema.gov/portal/search.

Raymond E. Carroll is a state- certi ed general real estate appraiser in Naples.

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