So, you’ve found “the one”. Congrats! Oh, but you’ve also found out that it’s in a flood zone?
First off, let’s put this into perspective. Everyone is in a flood zone. Some are just at a higher risk than others.
Southeastern North Carolina is a coastal region. There are a lot of homes in areas that will at some point face the risk of flooding due to high amounts of rainfall from hurricanes and tropical storms, and it’s not just for homes along the beach. A portion of inland homes must deal with the effects where drainage isn’t well managed and water run-off enters the local rivers and streams. No area in the United States is immune to natural disasters. These are the risks we must deal with owning property near the coast.
While we can never say with 100% accuracy when or how often flooding will occur, the Federal Emergency Management Agency (FEMA) has created maps that show the chances of flooding based on historical events and data. Insurance providers and lenders use these zones to determine insurance requirements and coverage. You can check a property’s flood zone by searching the Flood Risk Information System. It can also be found on the county tax records.
FEMA Flood Zones
Here are the flood zones and their risk levels:
Zone D: Land in this area has not yet been studied, but some amount of flooding is possible.
Zone X and C: Homes in these areas are at the lowest recorded risk. There may be some local drainage issues, but nothing that warrants a study. They are considered above or outside the 500-year flood level (.2% chance of occurring in any year).
Zone B: These areas are considered to be between the 100-year (1% chance of occurring in any year) and 500-year flood levels. They include shallow flood areas that have an average of less than a foot of water.
High Risk (flood insurance is mandatory)
Zone A: These areas have a 1% chance of flooding. Over the course of a 30-year mortgage, properties have a 26% chance of flooding.
Zones AE, A1-30, & AH: These three have the same chances of flooding as Zone A. AH alone also has average water depths of 1-3 feet.
Zone AO: These are areas at risk of flooding from a river or stream, or have a greater than 1% flooding risk with waters averaging 1-3 feet. They also have a 26% chance of flooding over the course of a 30-year mortgage.
Zone AR: These areas are only temporarily at risk of flooding due to the presence of a flood-control system such as a levee or dam that’s currently under construction or being restored.
Zone A99: These areas have a 1% chance of flooding, but also have a flood-control system such as a levee or dam.
High Risk – Coastal (flood insurance is mandatory)
Zone V: Like the A zones, these areas have a 1% or greater chance of annual flooding and a 26% chance of flooding over the course of a 30-year mortgage, but also the increased risk of storm waves. This zone includes the first row of beachfront property.
Zone VE and V1-V30: These zones are very similar to Zone V, but are differentiated by detailed analyses that are probably best explained by a professional.
It’s important to note that being in a low risk flood zone does not guarantee that you won’t have to deal with damaging floods. Floodsmart reports that “more than 20 percent of flood claims come from properties outside the high risk flood zone.” Flooding is the most common natural disaster in the United States.
Extra Costs of Buying in a Flood Zone
Standard home insurance does not cover flooding, so lenders, especially those federally associated, will require you to pay for a separate flood insurance policy. How much more depends on the risk level and how much of the property is included in the flood zone (partial inclusion may be cheaper than full).
There are private flood insurance policies, but most are done through the National Flood Insurance Program (NFIP). The average annual cost is $700, but that can go up to several thousand dollars in the highest risk areas. The average claim for flooding has averaged close to $43,000 in the past. You may also be required to get an elevation certificate to secure insurance, which could cost upwards of $1,000, but you can shop around for that.
Policies for the National Flood Insurance Program are sold through insurance agents, not directly from NFIP. It’s a good chance that the agency providing your standard home insurance can help you secure a policy. Some policies are also able to be grandfathered from the seller to the buyer. If the home you’re interested in has a policy already, you can get a good idea about cost through your real estate agent.
Should You Buy in a Flood Zone?
Is your dream to live at the beach? Yes? The hard truth is that the beach and flood plains often go hand-in-hand.
Is the location perfect and can you afford it? The risk may be justified for you. It really depends on your needs and goals.
Are you just looking for a regular house – not water frontage? Is the cost straining your budget? Then, you probably want to keep looking.
You have a lot of questions to ask yourself. The good news is that North Carolina real estate transactions include a Due Diligence Period in which you can get a true understanding of the viability of owning the home you want to purchase. That means investigating insurance options, completing inspections, resolving potential issues with the home, and finalizing financing. If you discover that the insurance will be too expensive or that the home has already received expensive flood damage, you can back out before the end of the Due Diligence Period and get your Earnest Money back.
If you’re thinking about buying a home in the greater Wilmington area, please contact us. We’d love to talk about your options and are happy to answer any questions you may have about real estate for sale here. You can also visit Our Areas to learn more about our coastal location.
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