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Last August, realtor.com® began displaying flood risk information on for-sale properties across the United States. The data comes from two sources: FEMA and the nonprofit tech group First Street Foundation, and together, covers all of the nation’s waters as well as areas inland where heavy rainfall can cause flooding. Consumers can now see the FEMA flood zone for each listing and a Flood Factor rating between 1 (minimal risk) and 10 (extreme risk). Overall, the combined data shows that nearly 15 million homes and commercial properties nationwide are at high risk for flooding—many more than the FEMA maps show alone.
As the Flood Factor data becomes more widely known, some buyers may have questions about the flood risk information. Real estate agents and brokers are an information source, not flood experts. You can provide the facts that every home in America has some flood risk, and diagnostic tools like the ones at realtor.com® can help determine if it makes sense to schedule a home inspection from a qualified flood risk professional. You can also be ready with contact information for the local floodplain manager, a few licensed surveyors and/or professional engineers who can answer property-specific questions and offer options to mitigate flood risk.
The National Association of REALTORS® (NAR) policy supports realtor.com®’ s decision to promote full transparency, disclosure and mapping of the flood risk, as it will lead to better informed real estate decisions. By displaying flood data upfront on listings, realtor.com® can help consumers and their agents avoid buyer’s remorse or even litigation while increasing confidence in their home purchases.
Homebuyers should also talk with their insurance agent about flood insurance options. Even if a lender doesn’t require flood insurance, that doesn’t mean buyers don’t need it. One-third of federal disaster aid goes to “low-risk” properties outside of FEMA zones and usually means an SBA loan needs to be repaid with the mortgage. Flood damage is almost never covered in standard homeowner insurance policies and requires homeowners to get supplemental insurance either from the National Flood Insurance Program (NFIP) or private insurance brokers. NAR created a brochure in collaboration with FEMA, “A Real Estate Professional’s Guide to Discussing Flood Insurancepdf,” that provides tips on how to talk to buyers about flood insurance so they can make informed decisions about it. Please be ready to identify insurance agents who can help with flood insurance.
Real estate professionals also have several legal and ethical obligations when it comes to flood-related disclosures in a transaction. NAR recently commissioned a Legal Research Center study, which found a number of lawsuits against real estate professionals for not taking more steps to disclose flood risk. Watch the video on flooding from NAR’s Window to the Law series, available on YouTube, featuring Deanne Rymarowicz, NAR associate counsel, to learn more about your disclosure and obligations in discussing flood risks with your clients. For more information about Flood Factor or other flood-related policy issues, please go to www.nar.realtor/floodinsurance.
Austin Perez is NAR’s senior policy representative on Insurance Issues.