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Jim presenting at the Emergency Management Institute outside of Washington, D.C., October 2014. "I am excited to apply what I learned at EMI, and it was nice to meet new people." ~ Jim

Message from Jim

Last month, we successfully obtained a Letter of Map Amendment Determination Document (Removal) on behalf of a client. Good news, but not perfect news! She purchased her lakefront home in 2006 and was required to obtain mandatory flood insurance since the loan collateral, her home, horizontally scaled in a Special Flood Hazard Area (Zone A). At that time, she decided the $800 yearly premium resulted in an affordable $67 monthly premium, so she proceeded with the purchase. For various reasons since her purchase, the flood insurance premium slowly increased to the currently quoted $1,800, or a $150 monthly premium. With a cumulative premium increase of 225%, she finally started asking questions and learned that a process exists to challenge a horizontal flood determination.

Since the purchase of her home in 2006, our client paid over $8,000 in flood insurance premiums for a dwelling twelve feet above the flooding source. In this situation, perceived risk was high due to horizontal proximity to the water, but actual risk was low. It is also important to note the opposite can occur, and actual risk is high, but perceived risk is low. The latter concept is supported by the statistic that 26% of all flood claims occur outside the Special Flood Hazard Area. Both scenarios play out daily throughout the country with various monetary impacts, some of which may occur in excess of ten-fold the above example.

An example of GIS flood map error. The broad, lighter-colored blue section indicates the Zone A floodplain along the watercourse according to the GIS flood map overlay. The darker blue line indicates the shape and location of the actual watercourse.

So what are the side effects of an incorrect flood determination? Let’s start with a change in real estate values for a seller or diminished purchasing power of a buyer due to increased debt. Other side effects include poor Realtor representation impacting reputation and diminishing a professional or personal relationship, while creating potential liability. Other impacts include improper loan to value ratios resulting in a higher interest rate, inability to qualify for a loan or private mortgage insurance, inaccurate appraisals, foreclosure, or lost commissions by the lender, insurance agent or Realtor. Most importantly, a homeowner could pay thousands of dollars for insurance they may not need, or lose tens of thousands of dollars of value.

I realize many Realtors may take the stand that flood is not part of the job description, but as flood starts to show up on a Seller’s Disclosure, it becomes a transaction obstacle that must not be overlooked. Personally, I think flood should have its own section on the Seller’s Disclosure and given much more importance than items such as well or septic system condition, or age of the heating system or roof shingles, since potential impact on value is much greater for either perceived or actual flood risk. Why should flood have a greater presence in disclosure? A computer generated flood determination from an out of state office cubicle for $15, or the improper use of municipal GIS platform, is just not fair for a homeowner looking to purchase a dream. Define representation through professional responsibility and a relationship built with trust, honesty, integrity, and kindness. Remember, a real estate transaction is often the movement of a large majority of a person’s net worth. Take care of your clients by understanding the flood zone.

Impacts of the King Tide in downtown Portland, Maine near Jay's Oyster off Commerical Street. Photo by Sarah Marckoon, from the WCSH6 News Report, October 9, 2014.

Resources

King Tides: Gulf of Maine

If you were out along the coasts of Southern Maine or New Hampshire on October 9th, you may have seen areas inundated with water when there was no noticeable flooding event, such as a rain storm. This was the result of the King Tide, a predictable tidal event which typically occurs twice a year when the moon is closest to the earth and aligned with the sun. The actual height of the rise will depend on current weather and ocean conditions. This event, of course, occurs all over the world.
Click on the photo (right) to view the Channel 6 News broadcast.

The yard of a resident in the Wells Beach area. "The tide was about a foot higher along the Ogunquit River near the town's waste water treatment plant. The town is already planning to move the plant to an inland location because of extreme high tide concerns." (WCSH6, 2014)

While the King Tide is not caused by sea level rise or climate change, scientists believe that these naturally occurring extreme high tides may indicate what higher sea levels could look like. According to the King Tides: Gulf of Maine website, "It is possible that by 2060 to 2070 we could experience tides of the magnitude of king tide events every month due to sea level rise induced by climate change."

Researchers from many different agencies in Southern Maine are studying the impacts of these tides. Some areas are using the King Tide as a tool for future planning. (WCSH6, 2014)

"From BW-12 to GW-14 and Beyond..."

Terri L. Turner, AICP, CFM, recently wrote an article summarizing the impacts of the Biggert-Waters Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014. A link to Terri's article can be found on our website!

Here's a sneak peek:
"Months of wailing and gnashing of teeth from financially stricken property owners and the real estate industry, debate and rhetoric by the experts in the flood insurance industry, and debate/concession/revision/modification/ and more debate on both the floor of the House and Senate, and out of the ashes and embers the Homeowners Flood Insurance Affordability Act rose like a phoenix to “reform the reforms” made by BW-12. "

Click the photo to read the NFIP brochure.

Insurance Corner

Flood Q&A

Q: Why should I purchase a flood insurance policy since the Federal Emergency Management Agency (FEMA) makes disaster assistance available after a flood?
A: Disaster assistance is only available if the President declares a federal disaster. If you qualify for disaster assistance funds, it will most likely be a loan that must be repaid, with interest. Flood insurance claims are paid even if a disaster is not declared by the President. A flood insurance policy is also more cost-effective than relying on disaster assistance.

Fun Fact

The longest-lasting and farthest-traveling tropical cyclone ever recorded anywhere on earth, Hurricane John, moved westward across the Pacific Ocean for 31 days, from August 11th to September 10th, 1994. It reached near peak intensity just south of Hawaii on August 24th, when it was then listed as a Category 5 hurricane, but caused no fatalities. Hurricane John traveled a total of 7,165 miles!

Lawrence, Miles (1995). "Hurricane John Preliminary Report". NOAA.
Dorst, Neal (2004). NOAA Tropical cyclone FAQ. NOAA.

George Caleb Bingham’s "The County Election", 1852. From the St. Louis Art Museum.

History Corner

Why do we vote on a Tuesday in November?

In 1845, Congress decided to set one day for polling, but why November, and why the first Tuesday following a Monday? In the 1800’s, the United States was largely an agrarian society and farmers needed a full day of travel by horse-drawn carriages to the county seat to vote. Tuesday did not interfere with church obligations or the Wednesday market day. November was most practical since planting and harvesting consumed much of the three farming seasons, but by November, the harvest was complete and the harsh winter weather had not yet commenced. The first Tuesday after the first Monday also prevents Election Day from ever falling on November 1st, All Saints Day, and a Holy Day of Obligation for Roman Catholics.

Learning Events

Upcoming Events:

We will be presenting our Maine Real Estate Commission-Approved course, "Understanding Land Surveying and Flood Zones" on:
November 5, 2014 - Mountains Council of Realtors, Membership Meeting and Education Course, Farmington, ME (Sponsored by The Real Estate Learning Group)
November 10, 2014 - The Maine Real Estate Network, TMREN Training Session, South Portland, ME Office (Sponsored by Beyond the Boundary, the Educational Component of Nadeau Land Surveys)
November 13, 2014 - Kennebec Valley Board of Realtors, Maine Association of Realtors Office in Augusta, ME (Sponsored by The Real Estate Learning Group)

November Land Surveying Funny

"Land Surveying" posted to YouTube by codyamyhustead 11/23/2010.

Click on the image to watch a rather hilarious (at least, to us surveyors) animated YouTube video about a typical day in the life of a land surveyor. It highlights some interesting points about public perception of land surveying and the common misconceptions that arise from lack of understanding about the processes we use. These misconceptions are the driving force behind our desire to educate our clients and other real estate consultants.