Special Flood Hazard Area

[hal380]

Good Morning all:

The appraiser must quantify the effect on value, if any, for properties within a designated flood map

Doing an appraisal, and sure enough subject and one comp is located in A5 zone. Other comps not in flood area. The area does not LOOK like its in a flood area, so the typical buyer would only find out after the appraisal in most instances.

How do you quantify the effect? How do you mirror the typical buyer's reaction to a flood designation?

A- Deducte the monthly flood insurance premium from the mortgage budget and therefore you buy a smaller house cus of less mort. money?

B- Increase the value because the house is situated on a nice trout stream or bass lake. (not the case of my assignment)

Any thoughts would be appreciated.

Regards

Hal

 

[Pamela Crowley (Florida)]

Here we have a lot of flood zone areas and I rarely find a negative effect unless it really does flood regularly. Even then, so many that do flood regularly are waterfront and that offsets it. It takes a lot of research to find an adjustment for this here, but sometimes it does show up. Nothing simple in this one. Wish I could help more.

 

[Ben Vukicevich SRA]

Hal,

Flood areas are definitely a problem but you may be able to tap dance out of this one....Are the improvements in the Zone A area or just the land? If the improvements are NOT in the Zone A flood area, then flood insurance is not required (FEMA doesn't insure land, only the improvements).

Ben

 

[hal380]

Thanks Ben;

Whole neighborhood is in zone A5. I have 1 comp within 2 blocks of subject and therefore same zone.

It may be a flood zone, but is not the Mississippi Delta. We really dont get flooded out around here. Except the shoreline and along some of our rivers. Of course when we have a hurricane and alot of rain, you will get some of the basements with a few inches of water, but thats about all.

The biggest impact is the economics of being forced to buy flood insurance.

Take care

Hal