Macottre, Home Buyer in New Orleans, LA

if i purchase a flood damaged home in zip code 70124, is it necessary to have it elevated for insurance qualifications?

Asked by Macottre, New Orleans, LA Tue Dec 29, 2009

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Simple answer to your question is "NO". Let's talk about flood insurance 1st. Your main issue dealing with flood insurance is the price. If you are purchasing a flood and gutted property it is most likely below the base flood elevation (BFE) level Flood insurance is very costly for these properties because of the increase risk. To get a good idea of how much risk you are taking on try to find new construction in the same block or as close to the subject property. Eyeball (or guess) where your lowest floor level (include all rooms you plan to in close with insulation and sheetrock) and that is the amount you can expect to pay above the BFE. If you raise your property to BFE level you will be looking at paying between 400 - 500/year for flood insurance. If you are below, WATCH OUT. I sold a property on Vicksburg near the interstate and the Flood Insurance was 2700/year (crazy).

Home Insurance: You won't be able to get a true Home Owners Policy because you are not living in the house. The name of the policy you are shopping for is a "builder’s risk" policy. This policy will vary in price depending on the insurance carriers, agent, and scope of your project.

SIDE NOTE: Buyer Beware: All insurance agents are not looking out for your best interest. They should really be called insurance sales representatives because they work for their company’s best interest. As a real estate “agent” I have a fiduciary duty to hold my client’s interest above my own. I have never seen any fiduciary talk coming from an insurance agent. Shop around and get as many quotes as you can. You are going to find out that for every 5 insurance agent you call 2 will return your call and you might get one to give you a quote.

Since you looking into flood and gutted property make sure you check city of New Orleans Damage Assessment website to make sure you will be able to get permits on the property. This is the very 1st step I tell my client who are looking into purchasing this type of property. The direct link to the website is http://www.cityofno.com/portal.aspx?portal=1&load=~/CNO/… (copy and paste this URL directly in your web browser if it doesn't show up as I link) If it's above 50% damage you are required to raise the house to receive a permit (which is more important than insurance because you wouldn't be able to make improvements on the property) or tear it down. Side note: A high damage assessment is a great tool to get a price reduction during your negotiation.
Shoot me an email if you need any more information on this topic awalker@latterblum.com
1 vote Thank Flag Link Tue Dec 29, 2009
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