What does a 100 year flood plain do to value, %-wise? (appraisal, 1%)
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All things being equal. For a home in a subdivision. Is there any rule an appraiser would use on setting value? How about the assessors? Obviously, there would be hurdles to getting a loan, but could that make for the potential to get a great deal as a cash buyer? What are your thoughts? And what about cases, where you weren't in a flood plain, but now are? I wonder if that has produced some jingle mail.
Drops the value, especially if the other houses aren't in a flood plain. It's hard to quote a percentage but I'd expect a noticeable price decrease since the flood insurance is expensive and that makes less people want to buy the home comparable to the ones around it.
I agree it's a bit different if it is waterfront and the rest aren't, though. The appeal of waterfront would adjust the appraisal higher than the likelihood of flood would drop it.
All things being equal. For a home in a subdivision.
Is there any rule an appraiser would use on setting value? How about the assessors? Obviously, there would be hurdles to getting a loan, but could that make for the potential to get a great deal as a cash buyer? What are your thoughts? And what about cases, where you weren't in a flood plain, but now are? I wonder if that has produced some jingle mail.
Drops the value, especially if the other houses aren't in a flood plain. It's hard to quote a percentage but I'd expect a noticeable price decrease since the flood insurance is expensive and that makes less people want to buy the home comparable to the ones around it.
I agree it's a bit different if it is waterfront and the rest aren't, though. The appeal of waterfront would adjust the appraisal higher than the likelihood of flood would drop it.
It will depend for your first. If they're houses one lot back from the water those prices will be just as high.
What will impact price, and the cost of flood insurance, is if the houses aren't raised above BFE (Base Flood Elevation. That's the 100 year flood level plus 1 ft., or 2 ft. if built in the last ten years or so).
All real estate is local so an area in demand, flood plane or not, will be expensive.
Perhaps they didn't know at the time, or it later was designated as a flood zone. Remember, I stated all other things equal...so you can't use a waterfront vs. non waterfront, as that wouldn't be equal to begin with. You know how they reefer to the Tigres-Euphrates as the birthplace of civilization? Building cities on or near rivers in the US was just as common.
there's no way to say "all other things being equal".
From a pure economics sense - which really doesn't apply to your personal home - the value would be:
Annual flood premium divided by 12 and what would that be in a mortgage? ie, if it's a $1200 premium, that's $100/mo is today about $16-18K.
You've got a pot of money, and it can go towards house value/cost or it can go to flood insurance.
But the 100 year is very different from the 500 year. 1% vs 0.2% is a big difference. And if it's waterfront (not a creek/stream that floods), then the property is worth a lot more than one at the bottom of a hill and a runoff area.
It depends. Do you mean the house itself is in a flood zone or just portions of the property are in a flood zone and the house itself is not? We looked at property to build on and some had portions of the land (about 5%) in a 100 year flood zone, but there was still sufficient land for a nice building envelope for the house and a yard without getting too near the portion of the property that was in a flood zone. Even with this minor encroachment, I would estimate that these parcels were listed about 20% lower than otherwise comparable parcels that had none of the property on the flood zone. For us, this discount was not sufficient and we passed on these properties. I would never consider a property where the house itself was in a flood zone.
I have not seen one with an actual house built in the flood zone in my area. I have to imagine that the discount would be incredibly steep. I suppose it may be less steep in an area where a non-insignificant portion of the properties are in a flood zone, so it is more typical for the area and therefore less alarm bell inducing for those who live there.
there's no way to say "all other things being equal".
From a pure economics sense - which really doesn't apply to your personal home - the value would be:
Annual flood premium divided by 12 and what would that be in a mortgage? ie, if it's a $1200 premium, that's $100/mo is today about $16-18K.
You've got a pot of money, and it can go towards house value/cost or it can go to flood insurance.
But the 100 year is very different from the 500 year. 1% vs 0.2% is a big difference. And if it's waterfront (not a creek/stream that floods), then the property is worth a lot more than one at the bottom of a hill and a runoff area.
Take the case of having an 80 year old house. Today you get a letter notifying you that you are now in a 100 year flood zone. That is about as close to all other things being equal as you could get..so if it was worth 200K before, what does the value become the moment they change the designation. I don't think the cost of being insured is equal to not having the possibility of the claim.
Last edited by BuddyDean; 09-24-2017 at 03:36 AM..
so it's not on a (potentially) desirable body of water.
again, economically, it's just as I said.
In the market, it depends on what's available for the supply of Buyers. Many Buyers won't even consider it - likely a large majority of Buyers given the recent hurricane events. And it will likely take much longer to sell.
We have some properties that require flood insurance though, and since inventory is so tight, some Buyers have not only bought the home quickly but much closer to market value than I would have ever guessed.
Using another economic term - it's about substitution. If there's a house "like" yours that someone can buy that's NOT in the flood zone, 100% of buyers will buy it - you have t find someone that considers your price so appealing they'll willingly undertake the risk.
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