NFIP Flood Claim Payment & Selling My Home in Florida: Seeking Advice
Hello everyone,
I’m in need of some guidance regarding a challenging situation and would greatly appreciate any insights or experiences you may have to share.
I own a home in Daytona Beach, Florida, which has unfortunately flooded twice—first during Hurricane Ian and then again in Milton. I’m grateful for my flood insurance; after the first incident, I completed my claim and received over $100,000 about six months later. It took nearly a year to fully repair the home, and I listed it for sale in August 2024 once it was looking nice again.
In October 2024, the home flooded a second time due to Milton, and I ended up spending around $20,000 to $25,000 out of pocket for water cleanup and demolition. Currently, the house is stripped to the studs as I await finalization of the claim with my flood insurer. After months of waiting, I received a $20,000 cash advance, which helped pay off some credit card debt incurred during the repairs. I’ve recently received the remaining $80,000 claim payment, and the bank has released half, enabling me to begin repairs at last.
I received an offer to buy the home “as is,” fully aware of its flood history and for significantly below its value ($215,000). Considering I aimed to sell it for about $350,000 after the renovations last year, I found myself contemplating the offer. If I can retain the approximately $100,000 from the flood claim while selling it at a loss of $215,000, I’d be close to what I initially expected for the sale.
I’ve reviewed my NFIP policy and consulted with my insurance broker, who confirmed that I’ve followed the process properly and selling at a loss should be permissible. An online attorney service also indicated that since I won’t gain an unfair advantage from the retained cash and I’m transparent about the property’s flood history, I should be fine.
If anyone has gone through a similar experience or has additional thoughts on what I should consider, I’d love to hear your advice. I’m eager to move on from this property, which I co-owned with my ex-wife, and purchase a new home in a non-flood zone with my fiancée. Dealing with unreliable contractors during the first repair cycle was incredibly stressful, and if I can sell to a cash buyer quickly—even at a small loss—I would jump at the opportunity.
I intend to arrange for the bank’s remaining payment to be addressed in the escrow/title contract, contingent upon the sale, and I’ll ensure the contract reflects the flood damage, required repairs, and holds me and my flood company harmless.
Thank you in advance for any help or guidance! Your support means a lot. God bless.
I’m really sorry to hear about the challenges you’ve faced with your home. It sounds like you’ve been through a lot with the flooding and repairs. Here are some thoughts and suggestions that might help you navigate your situation:
NFIP Claim Restrictions: Generally, the National Flood Insurance Program (NFIP) does allow homeowners to sell their property after receiving a flood claim payment. However, it’s crucial to ensure that all necessary disclosures are made to potential buyers about the flood history and current condition of the home. Transparency is key to avoiding future liability.
Insurance Proceeds: Your broker seems to be on the right track regarding the insurance proceeds. Since you’re selling the home as-is and at a loss due to the flood damage, it’s likely that you won’t face issues with the NFIP regarding keeping the claim money. Just make sure all terms of the insurance policy are adhered to.
Consult an Attorney: Since many aspects of your situation involve legal and contractual issues, it may be worth seeking a real estate attorney, even if it’s just for a brief consult. They can help you navigate the specifics regarding the sale, the remaining mortgage, and how to handle the flood insurance proceeds properly.
Working with the Bank: When selling the house, ensure your agreement includes provisions related to paying off the mortgage from the sale proceeds. It’s common for sales to be contingent upon satisfactory mortgage payoffs, so your bank should be able to accommodate that request.
Escrow Arrangements: Setting up an escrow account to manage the transition of the sale proceeds, including paying off the bank and possibly holding back funds until the closing is completed, is a smart move. Make sure this is clearly outlined in your sales contract.
Disclosure: Continue being transparent about the home’s history and current condition with prospective buyers. Including a clause that holds you harmless for flood-related issues in the future is advisable, especially since the buyers are aware of the flooding.
Consider Your Housing Options: Discuss potential housing options with your fiancée, particularly how you can both move forward with a home that is in a non-flood zone.
Getting Multiple Offers: If the offer from the cash buyer is substantially lower than what you expected, it might be worth considering getting multiple offers (if time allows) or negotiating with the buyer.
Ultimately, your well-being is the priority, and if selling quickly helps you move on, it may be the right decision. Good luck with the sale and your future housing plans!