By Vicki Trapp, AHWD, ASP, CRS, GRI, SRES, SRS, President
Greater Chattanooga Association of REALTORS®
It seems not a week goes by that I do not hear about a real estate transaction that is stalled or cancelled over flood insurance woes. Across the country, excessive and uncertain flood insurance rates have left buyers and sellers in a lurch. This state of limbo over flood insurance has slowed the real estate market and affected our country’s economic recovery.
On the surface, the REALTORS®’ involvement in flood insurance reform may seem self-serving. Sure, we want to sell property, and we’re working with buyers who are ready to buy. Real estate brokerage is the career we’ve chosen and how we get paid. Yet, it is much more than a paycheck to us. We are tax payers, just like the current and future buyers and sellers we represent. Bottom line is we want what is best for all property owners – commercial and residential. And what has been happening related to flood insurance simply was unacceptable.
Some legislators have argued that this past year’s flood insurance rate increases were modest. Yet consider this scenario: At the time of a home purchase, the flood insurance premium was $2,700 per year. A year later the annual premium for the same property was estimated to be $10,000, which would have jumped to $47,000 this fall. That’s a 1640% increase in less than two years and nowhere close to my definition of “modest.”
So what did REALTORS® do? We spoke up. Loudly.
In October 2013, the National Association supported the “Homeowner Flood Insurance Affordability Act,” which was introduced in and passed by the Senate in January. This month, the House passed an amended version of the Act, which went back to the Senate for approval and should be signed into law by the President very soon.
What does this mean for property owners? The Act repeals a former provision in the law that triggered excessive and inaccurate premium increases over this past year. The Act refunds property owners, who incurred excessive premiums and were not told the rates prior to purchase. These refunds apply to all property purchases, including second homes and commercial properties. Lastly, the Act restores the grandfathering of lower rates when new flood maps are issued.
In a recent press release, National Association of REALTORS® President Steve Brown “applaud[ed] this bill for the relief and protection it will bring to businesses and families nationwide, who are experiencing financial hardship because of the extreme and sudden premium increases.” Brown added, “We believe this legislation will bring relief to property owners by ensuring a slow and steady phase in of risk-based increases.”
The Greater Chattanooga market has not been immune to its share of insurance woes. And I am pleased to work in an industry serve an Association that fights at the local, state and national level for what is in the best interest of property owners. Relief is in sight regarding flood insurance, which should be music to the ears for all REALTORS® and our clients.