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DH and I have started to joke that we should write a book. Either that, or we should just rent from here on out, because we have been slapped with more strange issues in the 12 years we've been investigating the second home market than should happen to people in a lifetime of home buying.

The topic of this post involves flood insurance. Because oftentimes VRs are waterfront, this may be more of an issue for those trying to buy a second home/vr than most people will be exposed to buying residential properties, but that is not a given. Flood zone maps are continuously being modified, which has indeed caused problems for the residential customers I had before leaving the real estate sales industry 5 years ago. It was very impressive to me in fact how many residences were impacted by the change in flood zone maps.

However, the focus here is the VR, be it creek/river front or ocean front. We have been amazed at how many ocean front properties on the Outer Banks of NC that are not eligible for flood insurance, and therefore financing, because they are at risk of washing into the ocean with the next big storm. Of course, these are properties that had sold for over $1MM that are now listed for 1/10th the price, cash on the barrel. Granted you are also taking on the risk that you will not be able to inhabit that structure when the next storm blows through, or you may be able to rake in the profits for years to come. Care to throw the dice?

And then there is the case where we tried to buy a river front in WV. We were told that the owner had flood insurance to a tune of $350/year, but with USAA, an insurer that we were not eligible for since we are not military. Still, we figured that the insurance through another company would not be much higher than that, and we pursued the purchase. We quickly ran into troubles when the quoted flood insurance came back at $9,300/year. Yup, not a typo. So we plunked down another $450 to get an elevation certificate, which the owner did not have. I won't delve into the reasons why she would not pay for it, but we wanted the property so we did pay. NEVER AGAIN. ALWAYS MAKE THE SELLER PAY FOR DOCUMENTS NEEDED TO SELL THEIR PROPERTY.

Ironically, it turned out that the elevation cert we paid for did not do the trick for FEMA, who wanted the original elevation cert from when the building was built. It seems as though if you can prove that the structure was built to code to the existing flood plan at the time, you can get it grandfathered. So I called around to the various survey companies in the area to see if they had done the original. You may have more luck that we did at the official records office, but between the courthouse fire and the general lack of organization, no prior records could be found for this house that was built in the 1980's. Yeah, not ancient history here.

And still after submitting this, FEMA still wanted $9,300 year. The problem was that no building plans could be found, and indeed the seller admitted that it was likely that the shed structure on the ground level of this elevated building was added later, an enclosure that IMO was necessary to insulate the well pipe and sewer pipe as it was exposed going from the ground to the elevated first floor. Similar to many rural areas, building code was slow to be imposed. So much for grandfathering. We could not prove that the existing structure was the original.

FEMA's website will convince you that if there is existing flood insurance, you should be able to transfer it for roughly the same price. Not so. In my investigations, I came across people who had their flood insurance jacked up simply from refinancing, to the tune of an extra $3K/year. No transfer of ownership, and the flood insurance co remained the same, but none the less...Further they will try to tell you that you can grandfather the property. We even got Senator Manchin of WV involved with FEMA, to try to get to the bottom of the drama. What this provided was a second person from another FEMA office that told us that it is what it is, don't look for logic. They are allowed to change the premium at any time for any reason. Officially, we were screwed.

In the long run, given the environmental issues WV faces in terms of fracking wells, we were probably blessed by this issue causing us not to buy the property, but be aware....flood insurance is not a simple subject.

BTW, that property is still available if you are OK with the possibility of pipes freezing. They removed the shed structure and insulated the pipes within a PVC pipe. I'm not convinced it will work, but hey, she has come down in price.

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