The Disaster Called Flood Insurance
That charming little creek running through the backyard in the East Bay could now end up costing owners $3,000 or more a year in flood insurance.
Here in Berkeley, Oakland and the East Bay, one of the disasters we rarely have is floods. Yet, thanks to Hurricane Sandy and FEMA, flood insurance rates through FEMA will be skyrocketing. Besides that, FEMA has also evidently redrawn the flood maps. So, what might never have been considered a real flood zone, now is. It seems that, even in California, we will be paying for Hurricane Sandy for years. As a result, when you prepare to sell a house in the East Bay, the new Buyer may be subject to the new FEMA rates…even if there’s a just a little creek in the backyard.
That was our experience recently when we helped Buyers purchase a property in Oakland. If you are in a certain flood zone, lenders will require flood insurance. In our case, the lenders required flood insurance. The caveat is that now all FEMA policies require what’s called an elevation certificate (which officially shows how high the house is above the flood plain). This costs about $1,200 to $1,500 by the time you find a surveyor who will do one. And it takes a couple of weeks. Once you have that, you apply to FEMA for insurance. No one seems to know exactly what these rates will be, but estimates range from $3,000 to $5,000 per year…even if you just have a creek that hasn’t flooded. The only way we found around this was a Lloyd's of London policy, which some lenders won’t accept.
So a word to the wise. If you’re buying or selling a home near a creek, make sure you get started early investigating flood insurance. Unless, that is, Congress opts to reduce rates, which they are considering. Otherwise, it’s a disaster.
To develop a strategy for selling your current home or buying a new one in 2014, contact your Oakland real estate specialist Barbara Reynolds at (510) 847-2409.