When purchasing a home, is it worth considering a property located in a flood zone? The answer may depend on your risk tolerance and what you are looking for in a home. Flood insurance is not a requirement, but if you are looking at a property with a high risk of flooding, coverage is recommended and other due diligence checks. These are what will help you decide on the purchase. We discuss the questions to ask that will help you understand the risks and benefits of purchasing a home located in a flood zone.
Important Questions To Ask When Buying In A Flood Zone
Table of Contents
What does the building inspection report show?
Properties in flood zones are at more risk of being damaged than others. You’ll need to know that it’s in a solid structural condition before you buy. There can be obvious problems but beware of those you can’t see.
South East Queensland is a location notorious for flooding. If you’re looking to buy in this area, a building and pest inspection is a recommended step. Should there be any problems with the property, the inspector will identify these.
How Often Does The Property Flood?
Not all flood zones are the same. Some will regularly flood, while others will only do so occasionally. You’ll need to know how often this is and check flood maps.
The main reason for this is that you’ll want to know how often you’ll have to deal with the problem and consider the implications of flooding. Planning out potential repairs and maintenance will be a large part of this, including costs. More importantly, consider the need for an emergency plan and the psychological impact a flood could have on your family.
What Mitigation Factors Have Been Put In Place?
If you’re going to buy a property in a flood zone, you’ll need to know what measures have been put in place against them. If there aren’t any, that could be something that could impact your decision.
Often, there’ll be a certain amount of flood mitigation in place, and you should determine whether you’ll need to add to this.
When you’re doing this, it’s a good idea to check community flood defenses. You’ll often find that your property isn’t the only one at risk of flooding.
How Will This Affect Insurance?
In most cases, properties in flood zones will require insurance to protect against flooding, and it may not be a small investment. You’ll need to know how much this will cost before buying the property and whether it will it into your long-term budget. Also, be aware that particular insurers won’t insure a property in a flood zone. Asking the current owner can be more than helpful with this.
You’ll need to budget for the cost of owning the property. Is the low property price worth the increased insurance premiums? Will you handle this cost, or is it worth walking away to seek the peace of mind?
When you want to sell
You ask yourself, ‘should I buy in a flood zone?’ as you look at a fantastic property for a fraction of the price. Your risk tolerance is pretty high, and you’re keen to take a chance on the property. But have you considered what will happen when you want to sell? Selling a property in a flood zone can be difficult. Despite how appealing the property is, being in a flood zone is a deterrent or an opportunity for people to offer at a much lower price.
Is Buying A House In A Flood Zone Worth It?
The answer is, it’s up to you. If you’re looking for a home with a view, a flood zone can offer the perfect opportunity to have your dream home for a fraction of the price if you’re happy to take the risk. You’ll have more negotiating power on a flood zone property. But be aware that gaining a mortgage could prove difficult. Some banks will lend depending on the property’s type of flood zone, and some won’t. But, if this risk-averse lifestyle isn’t worth the chance, then buying a house in a flood zone is probably not for you.
Brisbane is a good example of when even the best data can’t predict flooding. The city experienced significant flooding in 2011, a one in 50-year flood. After a certain amount of time, property values started to rise again. But just ten years later, in 2022, Brisbane experienced another significant flood, much sooner than expected. Who knows what will happen to property prices with the flood events occurring so close together.
Unfortunately, it can be tough to predict when it comes to mother nature, and buying in a flood zone is somewhat of a gamble.
In Summary:
- Arrange a building and pest inspection before you purchase a flood-affected property
- Find out how often the property floods
- Investigate if any flood mitigation has been put in place
- Investigate home insurance, is the property covered, and can you afford it?
- Ask yourself, what is my risk tolerance? Are you happy to take a gamble?
- Is paying a small price for the lifestyle worth the risk?
- Are you prepared to sell at a below-market price?
- Taking the risk means you can have your dream home for a fraction of the price
- You can have more negotiating power
- Remember, Mother Nature is unpredictable.
Your situation and your adversity to risk will determine your decision here. As an investor, perhaps buying in a flood zone is a golden opportunity for a short term venture. On the other hand, looking for a suitable property to be a long term family home may have you thinking differently. Either way, it’s crucial to do your due diligence to be as informed as possible when making your decision. Lachlan Pascoe is the Founder and Director of Admired Building and Pest Inspections. Through his extensive work in the building industry, Lachlan has built a reputation as one of the most trusted and knowledgeable providers of building and pest inspection in Brisbane.
