Flood insurance and flood certification in Simi Valley California. If the flood maps says I need to buy it, can I fight it?
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Intro: Real Estate Answer Man, episode 14. Flood insurance and flood certification. If the flood maps says I need to buy it, can I fight it?
Barry: Hey everybody! I’m Barry Kessler, the Southern California real estate
answer man, coming to you from sunny Southern California. This is the podcast we talked about buying and selling real estate. We discuss investing in real estate, renting, leasing, landlord and tenant rights as well as California real estate law. We discuss home improvement, going green. Is it a good idea to put solar panels under your roof? If it has anything to do with putting a roof over your head or someone else’s head, we talk about it much more in this show. I’ll even take you to places only a native Southern Californian will know about. There’s something for everyone to learn. So let’s get started.
Barry: Thank you very much for joining me on this episode of the Southern
California Real Estate Answer Man Show, my name is Barry Kessler and I am your real estate buying and selling tutor.
They say these three words a lot in real estate, location, location, location. If you have a home that you need to sell that’s in a floodplain or in a flood zone you know that due to your location you’ve been paying FEMA flood Insurance. If you’re going to sell that home laying there in that flood area, you’re going to need to have a company perform a survey and provide an elevation certificate.
In episode 5, I talked about sellers closing cost one and of the cost was that if a home is in a floodplain, the seller needs to obtain an elevation certificate as an out of pocket expense to the seller of that home. If that home happens to show up on that FEMA map and be in the flood zone. In that show I promised to talk with an expert in flood certification so today we’re really honored to have Diane Levinson with us from Gentry Surveying in Simi Valley. Diane, welcome to the show.
Diane: Hi, good morning!
Barry: Good morning to you Diane, so tell me a little bit about yourself and
Diane: Well, here in Simi Valley, probably about 3-4 years ago I started
working for Gentry Surveying only after I had to go and get my own flood insurance. I actually ran into them at a street fair here in town and asking them can you help us? What can we do? Is there something that can be done? They at the time, they pulled up a map and sure enough we ran an area that they can possible help us in. This is also after sending letters to my local representatives. They come back with usually,kind of a choreographed letter that they give you and let you know they will. This is what it is, this is how it is. Many people have been in their houses for many many years and had multiple refinances on our house which is where we were at. Never requested flood insurance when we bought our house. We were never requested required to have flood insurance. We didn’t know that we were in a flood zone. Asking Gentry Surveying to come out, do a check on our house if we were eligible for getting removed from the flood zone or if there is anything that can be done. Lucky for us, we were actually those that were able to be helped in. After I picked up my paperwork and I said, “by the way I’m looking for job. Do you have any job openings”. And that’s where it started with me at Gentry Surveying. It’s been an interesting ride in regards to the flood zone, something that I never ever put to thought into.
Barry: Wow, I guess you really took Gentry to heart. You actually went to work
for them too. They helped you so it’s kind of neat because I’m sure that Gentry reaches out and helps a lot of people.
Barry: It’s funny, we have the same situation. Debra and I moved to Simi
Valley 25 years ago. The house that we’re in right now, we were doing our due diligence. We went down to inspect planning here at Simi Valley. We were checking out permits that were pull on the house. The guy behind the counter said, “you know I wouldn’t move in that house” and I said “why?” And he said, “because you’re in the floodplain. You’re going to be paying flood insurance.” That money is just money down the drain. And we look at each other like what?
Barry: Really? At that point, we were paying around $1200 maybe $1300 a year
for flood insurance. We like the house enough so we bought the house.
Barry: It didn’t scare us too much although looking back, we paid probably for
8 years. We were paying that kind of money and that was a lot of money. What happened was that there was a development that came above us and they changed the way that the flood area would look. Basically, our flood insurance disappeared. We really have thanked that development really for saving everybody in our neighborhood a lot of money.
Barry: It’s very important for an agent to know if the home they’re listing is
actually in a floodplain. If you’re paying flood insurance Mr. and Mrs. Seller, then you better let agent know especially if the agent is out of area agent who really doesn’t know or didn’t take the time to look and see if your home was actually in a floodplain. Diane, generally when agents list their home that happen to be in a flood area, does it ever come up in a conversation, do you think?
Diane: Nowadays? Yes. Three years ago? No. Three years ago seasoned agents
had really never even thought about the floodplain. 2010 after hurricane Katrina everything changed. Any federally backed loan was being required. Like I said, my own house, we took advantage of lower interest rates and refinanced our house multiple times since we purchased it and never once did the flood come up in regards to refinancing. It wasn’t required and all our loans were federally backed loans. But after 2010, all of a sudden, FEMA lost a lot of money in hurricane Katrina. What are we going to do? How are we going to recoup if it’s going to happen again? Let’s lay out the maps. Maps laid out across the country and they weren’t necessarily correct. Southern California, here we are. The real estate agents then even just three years ago, they did not know when it comes down to that burden of proof. Unless your told or unless you research, you don’t know. There’s a lot of homeowners that were not the sellers that were not required to have the flood insurance so like us did not know that they were in a flood zone. If they did not know, they were not being required to pay flood insurance. And how are they going to tell their agents, yes I’m paying flood insurance and I have been paying for so many years.
Barry: Okay, so there are sellers there
Diane: There are.
Barry: Who haven’t been tapped in the shoulder by FEMA and said to pay.
Barry: But now they are.
Diane: Now they are.
Barry: That’s going to show up either by the lender or by the H&D Company,
Barry: So the natural hazard disclosure company is going to send a disclosure
to the buyer that’s one of the items that’s required from the seller and that H&D report as I talked about before is about anywhere between $80 and $125. That is going to show all those things; if you’re in a fire zone or if you’re in a flood zone. If you got earthquake liquefaction all that stuff. That’s really the first time when you’re going to see that, right?
Diane: Yes and the interesting part is that sometimes I get insurance agents
that we work with here in town calling me up going, “hey and I just got my flood zone determination which is standard little form”, which you can get from the city. Pay to the city and they’ll give you their flood zone determination. This one says that’s it’s zone X but you’re telling me that it’s a Zone A-o1, which is it? And I pulled it up to verify again. It’s a Zone A-01. So even, sometimes the insurance company will have the incorrect zone, however they’re getting the determination there is some sort of conflict in there as to which one is correct. We go off a few months flood insurance maps and we have a google earth layover that has those insurance rifts, we call them firms on top of the Google map. I can pull it up instantly and take a look at it. If it is questionable. Google maps are pretty accurate. They’re not necessarily street elevation wise but where the layover is, it’s going to be almost identical to what FEMA’s map has.
Barry: Okay, that’s actually pretty handy.
Barry: Having that Google layover. So you got a call to perform an elevation
certificate for a seller which is mandatory in the sale of a home in the flood zone. Look, I have a little printout here from FEMA that says, The national flood insurance program elevation certificate is an administrative tool of the national flood insurance program which is used to provide elevation information necessary to ensure compliance with to community flood plan management ordinances to determine the proper insurance premium rate or support a request for a letter of map amendment and you get called a lot, for that,right? We’ll talk a little bit about map amendment in just a little bit but just so you know listeners what this piece of paper is. It is basically known as an elevation certificate and that’s where this company comes in and they do the survey to nail it down, right?
Barry: So what does it cost to seller for something like that?
Diane: With my company, we have several different rates in regards to areas.
But let’s say Simi Valley here we are for single family residents we charge $600. That includes coming out doing out the complete elevation survey. We submit it into FEMA. We do that, we deal with FEMA. We deal with any questions FEMA has because sometimes FEMA will have different people in FEMA that are looking at the FEMA map specialist that are looking at these information that we send in. And if there’s something questionable, they’ll come to us. We address it and handle it and it goes from there. We also, so once we submitted it to FEMA we also provide an elevation certificate and will also take care of submitting either the elevation certificate or the LOMA to the city of Simi Valley. I’ll send it on to insurance companies for people. We do all the leg work in regards to that aspect of it. I don’t deal with your lender because the lenders don’t want to talk to me.
Barry: Of course not.
Diane: That’s the one thing I would have to say as a lot of people don’t
understand. It’s that I don’t deal with lenders because lenders don’t want to deal with anybody other than you.
Barry: Okay, got it. So the cost again is?
Diane: We charge here in Simi Valley $600 for a single family resident. We do
charge a preliminary fee of a $100, that’s kind of a like a deposit. We call it a preliminary elevation survey. That means that $100 gets applied to the $600. If your house comes up as being there’s nothing that we can do in elevation certificate is not going to benefit you, you don’t have to move any further. You really aren’t required to have an elevation certificate in order to have flood insurance. You’re not even required to have an elevation certificate to get a quote. These are things that if it’s going to benefit you, people are going to purchase the elevation certificate.
Barry: Got it.
Diane: It is a process. We can provide an elevation certificate within a few days
of our doing our survey. However, submitting into FEMA is a lot longer process and the numbers that we get back from FEMA, those are usually the numbers that are going to be benefiting you on the elevation certificate. So the initial elevation certificate, there’s two types of elevation certificates and our fees will give you the adjusted elevation certificate after we get our stuff back from FEMA which unfortunately with FEMA can take anywhere from 45 to 60 days which is usually outside of closing escrow.
Barry: Yes. That’s a long time. But it could be changed afterwards, right?
Diane: Yes. Absolutely.
Barry: But it takes longer, the buyer or the seller is saying hey we’re going
Diane: Right. As we all know, we’re trying to close escrow on our house and
we’re in our last ditch penny here, we were scraping the barrel. We’re required to have that flood insurance which is upwards $1500 or more. It’s a lump sum that you’ve got to pay all upfront.
Barry: You have to pay the whole year in advance?
Diane: Yes. One year in advance.
Barry: Oh wow.
Diane: I have heard and we’ve read that they are trying to work on changing
that but again that’s something that we haven’t seen happen yet. Closing escrow, it’s so tough. You have to come up with all these fees. And for us, we don’t let it go through escrow, unfortunately. Our fee, we don’t let it go because escrows don’t close sometimes.
Barry: So that’s out of pocket you sellers you have to, and by the way, lot of
agents dont let their sellers know they need to bring money into escrow too. That’s not just the buyer that needs to bring in their good faith deposit. It’s the seller that needs to bring in money to cover costs just like this. Again, just keep that in mind sellers, you are also responsible for bringing some money in the escrow.
Diane: One of the things that they also need to think about is let’s say we do
our preliminary survey and that house is eligible for removing from the flood zone. We’re jumping, cheering for these people because we know it’s going to happen. It doesn’t happen again 45 to 60 days with FEMA. But you also get a refund on your insurance policy. So you close the escrow paying $1500 for that insurance, you’re going to get that back. A process is always a process but you will get a full refund of that policy. Not adjusted, not a pro-rated, it’s a full refund of that policy when you get removed.
Barry: Wow, that’s better. That’s better than finding 5 bucks in your pocket.
Barry: Okay, well there is the silver lining, there you have it.
Barry: Alright. What’s the typical cost of flood insurance to someone who is
living into a flood zone?
Diane: If someone is going into buying their flood insurance and they’re in a
flood zone. The average cost is $1500, I’ve seen upwards of $3000. But the average is $1500. Sometimes the elevation certificate, when I say we’ve got two different types of elevation certificate. There’s one that a lot of people close escrows with. It’s called the hag and lag highest adjacent grade,lowest adjacent grade. Then there’s the natural grade elevation certificate. That’s the one that is able to give, bring that $1500 policy down to $320 a year.
Diane: Right now. A couple of years ago, it was $170, now it’s $300.
Barry. What a bargain.
Diane: Yes, again that’s another one of those things we got to wait for FEMA
to give us our numbers or confirm our numbers. We usually already know what the numbers are going to be but we can’t sign and stamp our certificate until FEMA gives their stamp of approval.
Barry: This is crazy. Just think about this kind of money. Diane just said $1500
per year is average but right to the government I don’t know why they complain they don’t have any money. Think about that you guys, that’s a ton of money. Now, if you don’t have a loan, do you need flood insurance?
Barry: Okay. So look at that, paying off your loan. I mean, come on.
Diane: There’s been several people that we done work for that said this is
ridiculous. They’re not going to get removed. They did get reduced with natural grade elevation certificate but they said you know what I’m done. Some people cashed in their 41k just to get that roof over their head and the government’s insurance off of their backs.
Barry: Well, yeah, sometimes that makes sense.
Diane: I wouldn’t necessarily comment on that,that part of it.
Barry: I wouldn’t even, by the way you guys I am not making options. I never
pretend to be. So don’t take my word for it, I’m just thinking out loud here, okay? Your company Diane, Gentry Surveying, they get called in many cases to refute FEMA’s claims a lot,right? Let’s take this 100 year floodplain issue. Think about this, in your mind you’re thinking, okay the government says that they’ve determined that everyone 100 years or so. A flood of biblical proportions is going to come and descend on the population and wipe the place out. When in reality what this 100 year flood zone really means is that every year there’s a 1% chance that a major flood will wipe us off the map, right? It’s kind of misleading, this 100 year flood zone. There’s 200 year flood zones too so that’s ½ of a percent chance every year that you’re going to get wiped out. What do you guys do to help these people out?
Diane: Lot of it is literally just is calming people down. Right now, everybody
is panicking. Here in Simi Valley we’ve got the Royal going through town. The Royal is dried up from arranger on so from almost the middle of town to Easton it’s dry. What we end up doing is just letting people know that yes there is an answer, there is a possibility. Unfortunately, if you can’t get removed or can’t get lower flood insurance there is nothing else that can be done other than going with another insurance policy, another type that may be a little cheaper. Most lenders take it. But with us, we have to go within the guides of what the law says. You can fight FEMA and we’ve come across people that have spent thousands of dollars fighting FEMA. There are different types of zones here in Simi Valley. You have my street alone, they have three different flood zones on one house.
Barry: Oh my gosh.
Diane: Logically, people have been here for years, they look at things and go
I’ve been here for 50 years, it’s never flooded like that. Well, there has been intersections that have and there have been some neighborhoods where there’s a low area. And that one house may be a house that had a little too much water coming in from the street which is most of the time where the flood is coming from is the street.
We try to explain to them, it is hard because it’s an emotional thing. California’s expensive and so most people are paycheck to paycheck. This is one more thing, one of the biggest things I have to say, don’t let your lender force place a policy on you. You are paying double what you should be paying even if you are paying at the high rate of the national flood insurance program. You are paying almost double if your lender is the one that pulls the policy.
Barry: Wow, okay. Note to everybody, that is very very important. You were
talking about a cheaper alternative to the NFIP, the National Flood Insurance Program, what is that?
Diane: We know the the National Flood Insurance Program is FEMA.
Diane: There’s multiple insurance agencies that write those policies. There’s
also National Catastrophe Insurance Program. We call it National Cat or Lloyd’s of London is backer on that one.
Barry: We both heard of Lloyd’s of London.
Diane: Yes. Not all lenders take it but majority of them are starting to take it.
But basically what’s happening is that if you’ve got someone that we can’t help through National Flood Insurance Program with the natural grade elevation certificate, we refer them over to agents that can write Lloyd’s of London policies to see if the Lloyd’s of London policy will be accepted by their lender. Half the time, if it’s a $1700 policy and there’s nothing that we can do for the NFIP lowered, the National Catastrophe will bring it down to $900. With that, they don’t need us.
Barry: Ahh. Right.
Diane: So that’s around $600 for hearing Simi Valley. You don’t have to pay us
for that. Most the time we are at the point the only thing you’re paying is that preliminary fee to determine whether or not we can even help you. That’s $100. That’s all you’re out on that one. And then we say there’s nothing we can do, let’s refer you over to Lloyd’s of London. I know of a couple of agents here in town that do write Lloyd’s of London. Brian Gentry, one of the things he always said, “I’m out here to help the people here”. But we also don’t want to step on agents toes and so I will suggest that go back to your agent and see if they’ll do Lloyd’s of London or whether or not they can refer you to an agent that does Lloyd’s of London or I have a couple that write Lloyd’s of London here in town and I can suggest.
The bottomline is, we need to make sure we help our fellow citizens here in town. We try to keep our fees lower. We try to refer them to the correct agencies that know how to write the policies or educate their agency if they want to work through them.
We’ve got some really great agents here in town that three years ago may not have known a whole lot about the flood insurance program because it was relatively new. But I’ve worked with them, they’ve worked with us. We’re all about trying to help everybody. All the best we can.
Barry: That’s great. That’s why you guys too now. You are in Simi Valley but
you do operate in surrounding areas?
Diane: Yes. Correct. We were going out quite destines aways and then it
started because fuels are becoming not cost effective. We go up in Sta. Barbara. We do a lot of Malibu, down in L.A. In general, we are a regular surveying firm so we do have large surveying projects that we work on. Lot of times I might be able to throw an elevation survey on top of one that they are doing in L.A. That may be down the street or not too far away. We do Long Beach and lived on current county area. We usually don’t go out at super far because if it’s more than an hour drive away or an hour and a half drive away. The cost is becoming more. Unless of course you don’t have a surveyor in the area and you’re willing to pay for that.
Barry: I’m ready. I’m ready to pay you actually to get over here. Question, San
Fernando Valley got a lot of flood areas there too? Or is Simi Valley mostly bigger problem.
Diane: Ventura County is more the bigger problem.
Diane: San Fernando Valley has pockets. There’s been a couple of a pockets
that have you look at the map and is like what is that, a little pond? There was a gas station at the corner of Roscoe and not too far from the freeway. And it’s one of those little ponds but the gas station itself was a pi and ef. You know it was able to be removed from the flood zone.
Barry: Good work. Did you get free gas for a week?
Diane: That would have been nice. Yeah. No.
Barry: Yeah, no. Oh wow. There’s just so much to talk about here but I just
want everybody to realize that the situation especially if you’re in Ventura County and Simi Valley that flood insurance can be an issue and you just have to look out for it.
Diane: I have to say one of the hardest things for me dealing in the customer
service part of this is I do hear the stories every single day, multiple times a day. They’re irate people and rightly so, they’re furious with the government and I’m kind of the punching bag, at times.
Diane: Most of the time, it’s really really good. People as distressed as they
are. The hardest part is people at their retirement age and going into the condos. Condos are very difficult if they’re in the floodplain. We’ve had that issue with escrows not closing. There’s one retired man I felt so horrible because he was so far below where the condo was built. He was paying upwards about $3500 a year.
Barry: Woah! Oh my God!
Diane: That’s wrong. That is absolutely wrong. Even if it was a young person,
that is wrong. Our hands are tied. We squeak everything we possibly can by on those as far as we can go without doing anything wrong.
Barry: Yeah, of course.
Diane: The city is working hard. Some people think the city is not working
hard, they are. We are in a community rating system here which gives us a discount on these policies to begin with. Where some areas don’t participate in the community rating system and they’re paying a little bit higher. I believe it’s 15% but I’m not sure on that one, I don’t recall. Simi’s working. It is a long long drawn out process. It is not something quick, it is not something simple. It’s explaining that not every place is going to be high, not every place is going to be low. We’ve got streets here in town where we got four houses on one side and four houses on the other that were all removed and you got one in the middle that’s not.
Barry: Ouch. Yeah.
Diane: How do I explain that to the homeowner? Their neighbors aren’t paying
but they have to pay. It literally can be a tenth of a foot off that prevents them from getting removed from the flood zone and it’s usually the garage.
Barry: Wow, really?
Diane: Yes, because most of the garages have that 4-inch step down.
Diane: It’s attached to the house.
Barry: Yes, that’s it. That will save them little money, maybe?
Diane: Might, if they’re half in a foot of being removed from the flood zone
that usually brings them down to that $320 rate.
Barry: Okay, but still. It’s a lot of money.
Diane: Yes it is.
Barry: You’ll never see it again.
Diane: It is, I’ve been removed twice.
Barry: Wow, yeah.
Diane: They put me back in and then I have to submit again.
Barry: I got to say that in our office over at Troop Real Estate, whenever
somebody talks about flood insurance and flood certifications, elevation certifications and so forth, Gentry is always mentioned. It’s always the name that comes up. I want to thank you so much Diane for helping my listening audience understand what is extremely important issue. It’s very overlooked, it’s overlooked by most home sellers and most home buyers until the very end. Anyway, could you give us some contact information for Gentry Surveying so my listeners can reach you.
Diane: Yes. Gentry Surveying is 805-527-5299. I’m Diane Levinson, I’m the
main person that sets up these jobs. Even if you’re not even sure if your house is not even close to it, give me a call and I will look it up. It doesn’t cost anything to give me a call. I’m happy to see what we can do, specially when we want to sell these homes too. Get yourself prepared. If you think you’re getting to and you think you might be in a flood zone, give us a call. Get it done even before you get that sign up in your yard.
Barry: Absolutely. Thank you so much for fount or fountain of information
Diane: I’m learning stuff everyday.
Barry: Fount fonts of information everyday. Just remember that all of that
contact information will be available on my blog on my Shoutouts for this episode,episode 14 of the Southern California Real Estate Answer Man Show.
That should wrap up this episode of Southern California Real Estate Answer Man Show, all about insurance and flood certification. By the way, if you found this helpful, please give me a nice review on iTunes if you would, please. Thanks for listening the whole way through. Stay tuned and download all of my other podcasts. You can find me on barrykessler.com and remember that if you are looking to buy a home or sell a home in the Southern California area specially at the San Fernando Valley, Simi Valley, more part Thousand Oaks and Agoura or the surrounding areas the Kessler team is here to serve you with fantastic service and all of the finest tools in the industry. Remember to check out our website and our blog at barrykessler.com. I want to thank you all for listening.I look forward to seeing you in your next home.