Five Tips for Talking About Flood Risk with Home Buyers

When a home is located in a high-risk flood area, it doesn’t automatically become unsellable, nor does it mean a buyer should rule it out without weighing the options to protect it. Whether you are buying or selling a home, here are five tips for talking about flood risk and flood insurance with your clients.

1. Talk about flood insurance, even when it’s not required. Encourage buyers to research flood insurance, which is the best way to protect a home, personal property, or business in case of a flood. When a property is located outside the high-risk area, clients may be eligible for lower premiums.
2. Explain the value of flood insurance. Help buyers understand that homeowners insurance usually doesn’t cover damage from floods or mudflows. Federal disaster assistance is available only for presidentially declared disasters, and provides limited funds to begin recovery, typically through loans that must be paid back with interest. 
3. Understand flood risk. Let your clients know that flood risks change over time. The changes occur due to runoff of surface waters from any source, changing weather patterns that cause overflow of inland or tidal waters, wildfire, and mudflows. Even small streams can put their home at risk.
4. Discuss mitigation as a whole. Explain that buyers can take steps to mitigate flood risk, which help protect their new property and may lower flood insurance premiums. Depending on the property and flood risk, that could include things like adding a sump pump or foundation vents, improving drainage through grading, or even elevating a home or other structure. An agent who sells flood insurance can provide more information.
5. Don’t forget about your sellers. Encourage sellers to factor in the costs of flood insurance and flood mitigation when pricing a property that has been affected by flooding or is in a high-risk area. Completing some mitigation may also make the property more attractive to buyers.

Key Facts to Share

• Flood insurance is mandatory for homes in a special flood hazard area (or high-risk area) when financed through a federally regulated or insured lender. 
• While the government doesn’t require flood insurance for homes in moderate flood hazard areas, some lenders may still require it.
• Just one inch of water can cause up to $25,000 in damage.
• It can flood anywhere it rains. No location has zero risk.
• Between 2015 and 2019, 40% of flood claims came from outside high-risk areas.