In the past 12 months Australia has had its fair share of floods and with the weather pattern in La Nina, the chances of experiencing torrential rains again are high.
So what if you live in a flood zone and want to sell, or you’re happy to take the risk (and ensure you have insurance) to get a bargain on these properties.
Aussie Rockhampton franchisee Brendan Ryan has firsthand experience with flood zones, given his town was one of the places which has recently experienced substantial flooding, and over the years has had many floods.
Mr Ryan said there are quite a few issues facing property owners living in flood zones.
“Firstly, it may be difficult to ascertain what the house is actually worth following flooding damage as recent sales in the neighbourhood are normally the guide.
“And if nothing has sold, it may be difficult to put a price on it.”
He said there also restrictions on Lender’s Mortgage Insurance (LMI), which is required for purchases with a Loan to Value Ratio (LVR) of 80% and above.
Mr Ryan said securing home and contents insurance is also imperative, as the chances of further floods or damage can be quite high.
“The other factor is resale value as there may not be a lot of capital growth in the future so buyers really need to ask themselves what they are looking to achieve with a purchase in a flood zone.”
On the flipside however, Mr Ryan there maybe some wonderful bargains to be had and given meteorologists have forecasted years of unpredictable weather, it may be something we all have to live with.
“If you are looking to buy in these areas, you will need a 20 per cent deposit, a comprehensive building and pest report to ensure the house won’t fall down and of course, home and contents insurance with acceptable flood cover,” he said.