Online real estate sites like Zillow and Realtor.com have had a major impact on the real estate market over the last 5 years. You can almost find out instantly what your house will be sold for, however there are some misleading things on these sites. Sometimes the square footage might be wrong, the year built, or even the foundation type.

As you can imagine these things could have a big impact on what you could sell your house for in Huntsville Alabama. Having the lowest home inventory in 20 years can also magnify this issue.

However these things could be having an even bigger impact on your flood insurance premiums.

Everybody uses these sites now from realtors to home buyers to insurance agents. It makes it very easy to get the information you need to do a home insurance quote or a flood insurance quote if you are an insurance agent.

You might even be a potential buyer using this information to get your flood insurance quote.

STOP right there that is the wrong way!

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As we mentioned before these sites are not always 100% accurate. For example we were just reviewing a listing in Huntsville Alabama for potential home buyer where the property was in a special flood hazard area. We were reviewing everything on the home and noticed when it comes to flood insurance some things were different.

  1. Foundation type
  2. Year built
  3. Update details
  4. Estimated value

You see the North Alabama MLS and the online sites had the home listed with a basement, but when we reviewed it there was not a single side of the property that was underground. FEMA's definition of a basement is a property that has all sides of the home below grade.

When it comes to flood insurance this home was actually considered to be on a slab. Had this home been quoted with a basement it could have had some major exclusions for coverages on the first level as well as significantly higher flood premiums.

Now lets use the other example that confuses alot of people and that is when its listed as a basement when its really a crawlspace.

This mistake could have a significant difference on flood premiums. Sometimes the mistake is not caught for a few years. If you have a flood insurance policy through the National Flood Insurance Program they normally request pictures which can prevent this from happening. However if its a private flood insurance policy they may not request these documents and there is no getting this flood insurance premium back from previous years.

So how can updated details impact the property?

So say the site says the home was built in 1950 which makes it a pre firm structure but it was updated in 2004. It list many of the things that were updated but what it doesn't tell you is the home was torn down to the foundation and redone.

As a result FEMA no longer considers this a pre firm structure but instead it is a substantially improved structure. As a result the year built is considered to be 2004. Since the home is in a special flood hazard area an elevation certificate would be required if you decided to do a policy with the National Flood Insurance Program. The rating system could also be completely different since it is no longer a Pre Firm structure.

Estimated value might be one of the most common things that is off with these sites. Now it's always recommended that you reach out to a realtor so you can get accurate values of the market value of the home. Using the estimated value on these sites as an insurance agent can be very dangerous. Whether it is flood insurance or something else this could easily underinsure a property owner. Then what happens is when a claim occurs they may not get the coverage need to replace or repair the home.

This is one major complaint that property owners had in east Alabama on Weiss lake and Lake Logan Martin after the 2019 flooding event.

Many of these property owners either had the loan amount listed on the flood insurance or what they thought the homes value should be. The problem with alot of these sites is they use market value on these amounts and for flood insurance replacement cost is used.

So whats the difference?

Market value is the value someone thinks they could sell their home for.

Replacement cost is what it would actually take to rebuild the home.

As you can imagine when its a bad real estate market there could be a huge difference in these amounts.

So let's say that you bought that house on Lake Logan Martin in 2010 not long after the market crash. You got a great deal on it and got a great rate on the flood insurance.

It might not be as a good of a deal as you think. You might want to pull out that flood insurance policy in see what amount of coverage is listed on there.

I imagine you only have $75,000- $100,000 in coverage when you should have $150,000-$175,000 in coverage. You might not have that much coverage we recently had a client come to us that only had $85,000 in coverage on a 3000 square foot house. As you can imagine this $85,000 in coverage would not have gone very far on a 3000 square foot house.

So we have addressed some issues when using these online real estate sites. Remember while these tools can be great for getting information, you always want to verify this information with a licensed realtor.

So if you have questions about making sure your flood insurance policy is accurate or learning more about what flood insurance options in Huntsville Alabama are available then visit our website. You can also check out our daily flood education videos on our YouTube channel or Facebook page. If you are on the run then check out our daily podcast here.

 

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Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com