Tuesday, March 15, 2005
Flood Insurance Sure Hurts
Question: Hi! We are trying to sell a home in Hammond, Indiana. We just found out we are in a flood plain and new buyer MUST buy flood insurance. It is hurting us and some others who are trying to sell their homes. We lived there for twenty six years. It has not flooded in over twenty years and then only because they were replacing storm drains and did not get them installed in time. Any ideas what we and the others can do to sell? It is very discouraging. We get lots of bids but the flood insurance hurts.
Thanks so much for your question. It seems that flooding, and flood insurance, are fast becoming hot topics in the world of home improvement. Once an extremely under considered part of owning a home, the steady increase in wash outs has brought flooding back into the spot light. And it sounds to me if you are caught squarely between the proverbial “rock and a hard place.”
First, some quick background information. From 1968 until 1973, home owners decide whether or not to purchase flood insurance coverage for their properties. With the arrival of the Flood Disaster Protection Act of 1973, the government regulated the mandatory flood coverage for properties in affected areas. This piece of legislation prohibited any regulated lending agency from servicing any new or existing loans without the mandated coverage.
My response to your dilemma is a mixed bag. On one hand, I certainly empathize with the fact that your property does not see the flooding that the extra money would go to protect. It certainly is frustrating to miss closing opportunities because of such a technicality. On the other hand, if it rains, you must have an umbrella. Meaning, the rules are the rules, and there really is no legal way around them. And if there ever is a flood, you will be so thankful you followed the program.
You should also check out some of the incentives that the government has put into place following the reform of this legislation that make the monthly flood insurance payments more tolerable. Once you know of these incentives, make sure you feature them in your sales pitch to potential buyers. Once they become aware of the options, they may be more inclined to be accepting of the flood insurance monthly premiums.
Thanks so much for your question. It seems that flooding, and flood insurance, are fast becoming hot topics in the world of home improvement. Once an extremely under considered part of owning a home, the steady increase in wash outs has brought flooding back into the spot light. And it sounds to me if you are caught squarely between the proverbial “rock and a hard place.”
First, some quick background information. From 1968 until 1973, home owners decide whether or not to purchase flood insurance coverage for their properties. With the arrival of the Flood Disaster Protection Act of 1973, the government regulated the mandatory flood coverage for properties in affected areas. This piece of legislation prohibited any regulated lending agency from servicing any new or existing loans without the mandated coverage.
My response to your dilemma is a mixed bag. On one hand, I certainly empathize with the fact that your property does not see the flooding that the extra money would go to protect. It certainly is frustrating to miss closing opportunities because of such a technicality. On the other hand, if it rains, you must have an umbrella. Meaning, the rules are the rules, and there really is no legal way around them. And if there ever is a flood, you will be so thankful you followed the program.
You should also check out some of the incentives that the government has put into place following the reform of this legislation that make the monthly flood insurance payments more tolerable. Once you know of these incentives, make sure you feature them in your sales pitch to potential buyers. Once they become aware of the options, they may be more inclined to be accepting of the flood insurance monthly premiums.
