Flood zone affect property values?

[wvawoman]

Hello. I have been looking at a property that is being sold as a forclosure. There was an appraisal done on it by the seller, and that was supposedly how the price of the property was set. I have a copy of that appraisal, and it states that the property is not in a flood zone. Actually, it is. How much does that typically affect property values? The house is a double-wide manufactured home.

 

[Hall McClenahan]

Welcome and thanks for the question.

My first response is to advise you to get your own appraisal, You will be in a better position to negotiate the sales price.

Since we have no idea what comparables the appraiser used, the market reactions in that area, and the exact location of the property the effect of it's location in a flood plain will be hard to answer.

There is no set number, it has to be extracted or accounted for by market reactions. There are too many appraisals floating around out there that are not, factual, accurate, or professionally created. Again protect yourself and hire your own appraiser before investing any money in the current market.

If your property is in a Flood Zone then you have several issues to deal with.

 

[Randolph Kinney]

A flood zone designation is made by FEMA. What is most affected is the insurability of the structure. If you are in a FEMA flood zone, a lender mandates flood insurance be enforce and kept enforce for the life of the loan.

Are there like properties that are also in the same area / flood zone? Those would be potential comparables to use for valuation.

Since you have a copy of the appraisal, were the comparable properties in the same flood zone area?

If you are not confident that the prior appraisal is representing market value, you should look at hiring your own appraiser.

 

[Restrain]

Definitely hire another appraiser. You may have issues with rebuilding if something happens, the value of the land itself can be significantly affected, access can be affected, any number of things.

A little money now can save a bunch of problems later.

 

[Mike Boyd]

How do you know if it is in a flood zone? What is the flood zone designation?
What is it that causes the risk of flooding? Sometimes proximity to a body of water, a river or creek can add value and compensate for the risk of flooding that can be mitigated by flood insurance.

 

[wvawoman]

I don't have the whole appraisal, only part of it the seller gave me. It has the information on the house itself, but not on what it was compared to when determining the price.
The property is in Zone A. The appraisal listed it as Zone C. I was checking because I knew the whole area was flooded in 2003. I know that floods don't just happen in flood zones, but it made me want to double-check, so I pulled up the flood insurance map. I actually called the appraisal company to ask about it, since I thought that I may have read the flood map wrong. The woman there checked it and said, yes, they had made a mistake. They had the property down on a completely different road (correction - they had it down on the same road, but a different section of it). When she looked again, she said that it is in the flood zone. (For the record, that's an easy mistake to make in rural West Virginia. There are a million little country roads, and a lot of them don't even have official names. I can definitely understand how it happened.)

 

[murray stroupe]

Re; country road

I don't have the whole appraisal, only part of it the seller gave me. I actually called the appraisal company to ask about it, since I thought that I may have read the flood map wrong. The woman there checked it and said, yes, they had made a mistake. They had the property down on a completely different road. When she looked again, she said that it is in the flood zone. (For the record, that's an easy mistake to make in rural West Virginia. There are a million little country roads, and a lot of them don't even have official names. I can definitely understand how it happened.)

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Wonder what they use for a legal description[million little unamed roads]?????
Geese like flood plains, msot humans like thier feet dry @ home.

People some places rip off the aluminum signs, so theyre going to fiberglas.

 

[Mike Boyd]

So, they actually appraised a different property?

The appraiser should be required to go back and appraise the correct property and to do it correctly. This is a license losing violation.

 

[Parker]

Hello. I have been looking at a property that is being sold as a forclosure. There was an appraisal done on it by the seller, and that was supposedly how the price of the property was set. I have a copy of that appraisal, and it states that the property is not in a flood zone. Actually, it is. How much does that typically affect property values? The house is a double-wide manufactured home.

Better check with other lenders in your area to make sure there are loan programs for manufactured homes that will work for you. The seller will of course want to do the loan for you, but that may not be your best bet (remember, they are trying to unload a problem property). A mortgage broker recently told me that it is very hard to do a manufactured home loan right now, so make sure you have options, especially if you are counting on reselling the property, your future buyer may not be able to get a loan.

 

[Lobo Fan]

A MH in a flood zone cannot go FHA which could really limit your market. If you are looking to flip this property you might want to be prepared to carry a real estate contract. Flood insurance can be quite expensive, further limiting your buyer pool.

The only way to judge the impact of being in a flood zone is to find other sales in a similar situation and try to cipher whether there is a market impact.

Flood zone rules have changed. If any part of the parcel is in a flood zone, then the whole thing is considered to be in a flood zone.

I did one a while back that was on a severely sloped 7.5 acre parcel. The house was high on a ridge. One small corner of the parcel crossed an arroyo and was in a flood zone. In this case it was ridiculous because the house and 98% of the parcel was well out of reach from any flood waters (even of the Al Gore variety).

You can appeal the flood zone designation with the county. Missing a flood zone can sometimes be a software glitch, especially if it is a small irregular flood zone. We see them all the time that are narrow, winding arroyos, that have often been modified and rerouted by developers.

?You may want to truly verify the flood zone status.