I recently bought a house in the Derby Woods subdivision to rehab and resell. I knew that the house was in a flood zone when I bought it. However, the lot looked high and the house was several feet over street level. My thinking was “if this house ever floods, the whole neighborhood will flood!” I paid cash for the house and did not buy flood insurance, or even bother to check in to what rates would be.
After the rehab, I put the house on the market and found a buyer. The new buyer was financing, and needed flood insurance. Now for a quick lesson on how flood rates are set. A surveyor prepares a document called an “elevation certificate”. That document included a number for “Base Flood Elevation”, or BFE. That number, expressed in feet, is the level that water would rise to in a “100 year flood”. Put another way, there is a 1% chance each year that water would rise to, or above, the BFE. Then the elevation of the house is compared to the BFE. If the house sits above the BFE, flood insurance is pretty reasonable…if it sits below it, the rates get expensive, fast!
A well-known, experienced surveyor was retained by the buyer to provide the elevation certificate. He came up with a number that showed the floor level of the house sitting below the BFE, and the flood insurance rates came back at $4,000 a year! That would have added over $300 a month to the new buyer’s monthly payment! The buyers loved the house, but could not see paying that much for flood insurance. The deal died.
I thought I had a big problem. At these rates, this house was going to be very difficult to sell. What could I do?
I started making calls. I scoured the Internet for flood maps and other flood related information on the Derby Woods and Lynn Haven. I talked to Realtors that had done business in Derby Woods. I talked to other surveyors. After about two weeks, another surveyor took a look at the Elevation Certificate and asked me “Where did this guy come up with this BFE number? It looks wrong”. He referred me to the Bay County Engineering Department, who is in charge of establishing BFE’s in Derby Woods. And guess what I found out? The original surveyor had never contacted them. He had gotten his BFE from an outdated source. Not only was his number off, it was WAY off. The people at the county looked at the flood maps, established a new, correct BFE, and we got new flood rates. Less than $1,000! What’s more, with the new BFE I was able to petition FEMA for a “Letter of Map Amendment”, which they granted, which removed the house from the Flood Zone altogether. This means that the buyer’s lender would no longer require flood insurance! So in effect, the rates went from $4,000 to ZERO.
As you can imagine, I am furious with the original surveyor. His negligence cost me (and the original buyer) a good bit of money, and created a lot of stress in our lives. I have wonder if the “average” buyer or seller would have known who to call or what to do to solve a problem like this. Probably not. The probably would have thought that the first surveyor, being an “expert”, was right, and that they had a lemon of a house that they would have to discount to unload. I guess that, in the end, the big lesson from all this is, you have to check up behind people, even so-called “experts”.