How accurate are FEMA flood maps?

[Fernando]

My subject is about 25 feet away from AH flood zone.
Because it's not in AH, subject should be worth more than the comps in the AH flood zone. Right?

 

[Mike Ault]

My subject is about 25 feet away from AH flood zone.
Because it's not in AH, subject should be worth more than the comps in the AH flood zone. Right?

Your subject "dwelling" or your subject "parcel"?

 

[Fernando]

Your subject "dwelling" or your subject "parcel"?

I looked at alamode software and dwelling and parcel appears to be not in flood zone. Verified with FEMA website.
Question is whether just out of FEMA flood zone is good since unlike the other comps which will have to pay costly flood insurance premiums.
Because the comp two houses away is in FEMA flood zone, subject should be worth more. How lucky.

 

[Mike Ault]

I looked at alamode software and dwelling and parcel appears to be not in flood zone. Verified with FEMA website.
Question is whether just out of FEMA flood zone is good since unlike the other comps which will have to pay costly flood insurance premiums.
Because the comp two houses away is in FEMA flood zone, subject should be worth more. How lucky.

It depends on how up-to-date the FEMA flood map is. Keep in mind that the more land is developed, water which used to soak into the ground is running off of concrete and asphalt instead and down into the floodplain, thereby increasing the hazard. My house came within a hair's breadth of flooding several years ago and it's nowhere near FEMA flood zone. So, like most real estate questions, the answer has to be caveated with "it depends".

 

[sputnam]

My subject is about 25 feet away from AH flood zone.
Because it's not in AH, subject should be worth more than the comps in the AH flood zone. Right?

Can't say. It's a market question. Analyze market data to determine whether there is a quantifiable market reaction.

 

[Tom4value]

I would say if you could extrapolate a supportable adjustment, you are either appraiser of the year or full of…….

Here is why. Let’s look at your example, property is 25 feet outside of a AH flood zone.
Thought 1: “Cool! Don’t need flood insurance! I will pay more than this other house that is in a flood zone and I would need insurance.”

Thought 2: “25 feet? Does Mother Nature respect a government opinion? What happens if she doesn’t? I don’t have insurance.”

 

[Terrel L. Shields]

If the comps require flood insurance, then you can capitalize the cost of insurance as an adjustment. Say, insurance is $400 a year. GRM is 150, then the adjustment is 60k...which sounds high to me. But using a cap rate of the value of $400 as a sinking fund adjustment might be much lower.

 

[Fernando]

If the comps require flood insurance, then you can capitalize the cost of insurance as an adjustment. Say, insurance is $400 a year. GRM is 150, then the adjustment is 60k...which sounds high to me. But using a cap rate of the value of $400 as a sinking fund adjustment might be much lower.

Most buyers may not realize that one house could pay flood insurance and the house next door may not, and yet it could be costly.
Some appraisers don't realize that too when comparing comps in flood zone or not.