This time last week, we should have been toasting to the sale of our house in Baltimore. We were looking forward to the sigh of relief when it was all finally, really, actually done, but as you may have guessed since you’re reading this, things didn’t exactly work out that way. That’s the short story. Here’s the long version…
Aaron and I purchased our home in August 2006. After living there for seven years, we put it up for sale and were thrilled when it went under contract on Christmas Eve. Everything was going smoothly with the sale until February 27th, the day before settlement, when our agent called me to tell me the buyer’s lender raised a reg flag—our home now needed flood insurance. The news came as a complete surprise to us. We had never needed flood insurance while we lived there, nor had we ever had even a little bit of water in our basement or noticed any issues with flooding anywhere on our property or on our street.
Throughout the last week, I learned FEMA redrew the flood lines in 2008. I’m still not quite sure why this was never an issue until we went to sell the house, but I’ve been told it most likely has to do with provisions passed in the Biggert-Waters Flood Insurance Reform Act of 2012. At first, I was deeply disappointed that this last minute snag could put our sale in jeopardy, but I trusted the process. We had a surveyor come out to take the elevations of the property, and the report was submitted to the buyer’s lender. They came back with an estimate of $3500 to $4500 a year. I was absolutely stunned. To put that number in context, we currently pay $900 a year in general homeowners insurance, which fully covers every other type of risk and disaster put together. My in-laws have a property on a canal 25 feet from the water on Fenwick Island, and they pay $1100 a year for flood insurance. Now our little landlocked house would cost someone $3500 to $4500 a year.
It’s twenty-four hours after we got the estimate, and I still can’t understand it. It’s the kind of thing you think won’t happen because it just doesn’t make sense. Our house sits high on the property, and our lot is half way up a hill. We purchased our house when home prices were pretty much at their highest, but we were OK with taking a small hit on the price and felt luckier than most, knowing there were many people in worse positions than us as a result of the housing crisis. But this news about the flood insurance has been devastating. According to our agent at those rates, the value of our house will drop by another $50,000 or more.
So now we are just trying to triage. We got a second opinion from an other insurance company, but it’s not much better. I filed a Letter of Map Amendment with FEMA to appeal our zone designation, but that process takes 60 days. At this point, we either cut our loses or wait it out and maybe rent to someone in the meantime.
We’re also keeping a eye on new flood insurance legislation that’s supposed to repeal the most damaging parts of the 2012 law and bring some relief to people in our situation, but I am still unclear what if any direct impact it will have on our specific case and if there is anything that can be done until it passes. The bill is called Grimm-Waters by the way. No joke. It sounds like a bad horror movie, which sort of describes the last seven days a little too well.