ASSESSING THE FLOOD RISK
What should home buyers be asking? Real estate and insurance experts weigh in.
Tom Saab, broker/owner of Tom Saab Real Estate in Methuen and Salisbury, is very familiar with the havoc nor’easters can wreak on beachfronts. He has sold, rented, developed, and owned properties up and down Salisbury Beach since 1971. He remembers the names and dates of every major storm that has affected his beloved beach since.
He has seen it all, and he’s not going anywhere.
He said December 2022 storms decimated the sand dunes in front of his properties and others that abut Salisbury Beach State Reservation, leaving their homes vulnerable to damage. He said the state refused to rebuild the dunes in the park, which lies between the homes and the ocean.
“They refuse to help us, and, therefore, when the January storms hit, we got clobbered,” he said. “That’s why we had to then go buy $600,000 of sand and rebuild the dunes ourselves.”
On March 11, three days after that work was completed, another nor’easter barreled through and washed about half of that away. He and other volunteers with Salisbury Beach Citizens for Change were handing out bundles of dune grass and rolls of snow fencing to neighbors while being interviewed for this story. The hope is that the snow fencing will catch and collect sand blown by the wind and that the dune grass will help keep it there.
The group hopes for a long stretch of time without a major storm to allow the dunes to rejuvenate.
“I am embedded in this beach,” he said. “It’s a phenomenal beach. Nobody wants to leave Salisbury Beach. This is a spectacular beach that at low tide goes out 100 yards . ... Our rentals were already 80 percent booked for the summer season and on the first of April.”
And of all the homes along the 3-mile stretch of beach, there were only three for sale at the time of this interview, suggesting that his neighbors aren’t heading for the hills yet.
Heading a little inland is of little help
Davidson O. Calfee is owner/president of Arthur D. Calfee Insurance Agency in Falmouth. His concern? The farther you get from the beach, the less concerned people are about flood damage, he said. Hurricane Katrina destroyed his Mississippi home in 2005.
“Hurricane Katrina was a Category 5 hurricane that hit at high tide,” he said, “so there was a lot of water that was pushed a mile and a half inland. And the National Flood Insurance Program (NFIP) has a limit of $250,000, which is the coverage most mortgages require. That will certainly fix some damage, but it’s not enough to rebuild most homes in Massachusetts.”
There are private companies that offer additional insurance as well, which he recommended. He said there are concerns about future premium increases for nearly all kinds of insurance — to reflect the growing risks posed by more frequent and more intense storms. Insurance companies are also getting more selective about which properties they will insure, and lenders won’t lend on properties that aren’t insurable.
“There is a house that one of my clients is trying to buy, and I’m trying to get flood insurance on it,” he said. “And it’s been denied by a lot of our carriers. So we’re really trying to get them insured. I’m not going to say that they can’t get flood insurance, because we haven’t hit that point yet, but if it does, they won’t be able to get a mortgage and won’t buy the property.”
Joe Rossi, CEO of Joe Flood Insurance Brokerage, said there are risky properties that private flood insurance will have a hard time insuring at any price. For these properties, risk mitigation is crucial.
“In terms of mitigation, there are many things that can be done, such as elevating a home, removing things from vulnerable areas [such as basements], and boarding up windows in a storm,” he wrote in an email.
According to MoneyGeek.com, the average cost of flood insurance in Massachusetts is $1,305 a year, with Nantucket and Dukes counties paying the highest premiums: $1,821 and $1,999, respectively. And don’t think that moving inland mitigates all of your risk. Look at how “catastrophic” floods devastated the city of Leominster last fall. There in Worcester County, the average cost of flood insurance is $1,624 — $111 more than it is in sea-hugging Plymouth County.
Will Massachusetts see the exodus of insurance companies that Florida and California have experienced? No, the Globe reported in September, “though homeowners’ insurance companies are surely taking notice of climate change as they issue new policies, which could affect premiums.”
What does a real estate agent have to tell you?
According to Catherine Taylor, director of education and associate counsel at the Massachusetts Association of Realtors:
“A real estate license is required to disclose any fact, the disclosure of which may influence the buyer or prospective buyer not to enter into the transaction (Chapter 93A, 940 CMR 3.16(2)). Flood insurance is a lender requirement, so that would be an important discussion for the buyer to have with their lender if they plan to purchase the property with a mortgage.
“There are no laws that specifically require disclosure of whether the property is in a flood zone, but the requirements of Chapter 93A and the regulations do require disclosure of previous flooding or whether the property is in a flood zone if that is a fact known to the real estate licensee. As with other types of disclosures, even when affirmative disclosure is not required, if a prospective buyer asks a direct question, a truthful answer must be provided.
“The law requires that necessary disclosures be made prior to the parties entering into a binding contract for the purchase of the property. While the MLS is a useful tool for ensuring these disclosures are made, there is no requirement that a disclosure be included with the MLS listing information itself.”
Doing your own research is the best protection
Rossi said Federal Emergency Management Agency maps are helpful, but to find your true flood risk, it takes a mix of public resources such as floodfactor.com, asking community members what areas flood, and understanding a property’s flooding and claims history.
Adrianne Hanley is a vice president at Compass and helps people buy and sell oceanfront property. She said she learned very early in her career to do her due diligence to determine whether there’s any flood risk on properties her clients buy or sell.
“It was one of the avenue houses in Scituate, and it wasn’t on the water,” she said. “It was far from the water actually. I walked into this house, and everything was new, and it was a very young couple, and they said they wanted to sell to move closer to town.”
They soon had a deal with a buyer — who pulled out three days later after discovering via Facebook that the sellers had to be rescued from the home by boat just a couple of years earlier. The owners blamed Hanley and fired her.
“I learned a hard lesson, but you have to be honest with everybody,” she said. “You have to explain the risks of living near the water,” she said. “You know those houses that are on stilts? I just think, Why would you buy that? I’m very honest with my opinion with that. Some properties I see with my clients, and I tell them ‘I want you to know that this floods,’ and often they still go for it.”
The Commonwealth has a free, downloadable Homeowners Handbook to prepare for coastal hazards.