Conventional loan/Flood

[Mejappz]

I completed an appraisal on a 1004/Conventional. I use Alamode/Total software. Interflood is the flood map software in total. Per Interflood, the subject is located in AE dated 2009. I submitted the report and received a revision request from the lender to change the flood zone to X500. If I do so, I am going to have to change comps to reflect comparables with similar flood zone. Has anyone had to do this before?

How do you know the Flood zone has a negative impact on value? I don’t your market but down here the market does not seem to care between a property located in a flood zone and one that is not.

 

[sputnam]

Two things. 1- Flood determinations that come from 3rd party companies are sometimes wrong. You have to decide how thorough you are going to be. I look at the FEMA maps and decide for myself whether the property is in flood hazard zone or not. Since 3rd party determinations can be incorrect, maybe it's the Client's 3rd party that's wrong instead of yours.

2- As others have already stated. You may or may not have to change or add comparables. You have to determine what, if any, the market reaction is.

I'm wondering. It's still true that the most important determinants of value are location, location, and location. Have appraisers been so brainwashed by things like 10% line, 15% net, 25% gross and by bracketing, etc. that we've forgotten that appraising is about what a typical seller and a typical buyer would do?

 

[J Grant]

My comparables I used are Flood AE and now the subject will be x500. Should I not change comparables out since x500 does not require flood insurance and AE does require flood insurance?

Imo, you should not have picked comps by flood zone the first time ( unless it is such a big factor in your area )

Flood insurance is not that expensive !!! Call an insurance agent and find out, it is often $400-$500 a year, it slides with size of house, and amount insured but it is not that costly and the folks who do not buy flood insurance are the ones with a problem because flooding can happen in a nonflood zone as well. A flood zone just means they project it will happen once every 50 years ( or 100 years or whatever the projection is for that zone)

 

[Vermonter]

The lender has a map from a 3rd party showing x500.

I have had this before. Bank had a engineering firm state the subject house was not in the flood zone, only the brook front part of the lot. I knew better considering everything in the basement was on pallets, the boiler was hanging from the rafters and there were high water marks on the interior wall with dates.

Only had one other comp in the flood zone but it didn't impact value anyways. I disclosed the data used for special flood hazard (lenders 3rd party) and stated my opinion in the addendum. Nothing changed the opinion of value.

Not sure about your market, but the fact that the flood zone is in question would mean it's relatively close so would have similar market influence. At least it would in my market

 

[Tom D]

if there is flood zone confusion, it would be better to state all sides of the issue. let the buyer know and decide about the flood insurance. sort of a preemptive defense for a potential future real, or maybe, lawsuit like mentioned earlier.

 

[shrubberyvaluation]

if there is flood zone confusion, it would be better to state all sides of the issue. let the buyer know and decide about the flood insurance. sort of a preemptive defense for a potential future real, or maybe, lawsuit like mentioned earlier.

This, According to the local government its in this flood zone...according to FEMA its in this flood zone.