# FEMA and the 50% Rule



## TimNY (Sep 8, 2010)

(I thought there was a Floodplain Management forum at some point?)

I wanted to see what other municipalities were accepting as substantiation for a building's value as it relates to the 50% rule for FEMA.

On the one hand I have an appraisal submitted by the applicant, on the other I have the assessor's data.  You would think they are talking about different homes (although the total value is about the same).

Is there a specific appraisal criteria that has to be used (ie some ANSI standard) when evaluating for FEMA purposes?  The appraisal submitted by the applicant states "the improved property is worth X, vacant land would be worth Y, so the house is worth X-Y".

I know nothing about appraising, but from a common sense point of view this seems like an unorthodox means of arriving at a home's value.

Any advice you could offer would be greatly appreciated.


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## texas transplant (Sep 8, 2010)

We use the tax appraisal district info.


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## mtlogcabin (Sep 8, 2010)

Historically the tax appraiser is about 80% of actual value but in todays economy it may be higher than actual market value.

"The appraisal submitted by the applicant states "the improved property is worth X, vacant land would be worth Y, so the house is worth X-Y"."

I agree with this method because it is the value of the home not the land that counts.

My land has a 50% higher market value than my house.


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## cboboggs (Sep 8, 2010)

It is really a jurisdiction call. I will accept an appraisal submitted by the applicant so long as the valuation is broken out like you stated. For FEMA requirements, it is the value of the structure only that matters, not the land. If the applicant doesn't want to submit an appraisal, I use the county assessor's data since it is broken out by structure and land value.


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## TimNY (Sep 8, 2010)

Thanks for the replies.

I didn't know if there was a standard appraisal method that was employed, similar to there is a standard way (an ANSI method) to measure square footage when you are measuring a house for Fannie Mae.

I suppose the only issue left now is that while the assessor and the appraiser are within 15% for value of the improved property (house and land), the appraiser says the house is worth over 3x more than the assessor.  That's really what got me concerned in the first place.

I know we are concerned with the value of the house only, so the method of arriving at the value of the house is really my question.  If you buy 10 acres on the ocean with a 1000sf house for 10M, you could argue the property is worth 10M, so the house is worth $0.  Whereas if you went throuht the house and found standard construction employed, that house might be worth $100,000 on a 1 acre lot in the woods.  So do we determine the value of a home on it's own merit, or is it simply an "X-Y" equation?

I just had a FEMA audit, so I am a little on edge about these things


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## GHRoberts (Sep 8, 2010)

A lot of very nice houses are valued at $0 because the land value is so high that the house price is noise.

I would insist on a "rebuild" valuation - the value of the structure without regard to the land.


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## TimNY (Sep 8, 2010)

GHRoberts said:
			
		

> A lot of very nice houses are valued at $0 because the land value is so high that the house price is noise.I would insist on a "rebuild" valuation - the value of the structure without regard to the land.


That's what I tend to believe, but I am not looking to give anybody a hard time, I just want to do the right thing.  I sent an email to our FEMA liaison in the state to get his input.  I'll report back.


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## Robert Ellenberg (Sep 9, 2010)

50% value

I'll weight in on this.  Among other things I am a FEMA certified Flood adjuster, licensed contractor and have been involved in bringing houses up to current standards in several coastal communities.

It is a local jurisdiction issue and the rules are not hard and fast.  Tax values are not really valid unless you are in a taxing district that states that they asses value at 100% and then show the land separate from the improvements.  The most honest way (the one that would hold up in court) is a certified appraisal from a licensed appraiser for the value of the improvements prior to the damage.

However, a much less clear question than the value of the propery is what is the value of the damage (that makes up the 50%)?  If this involves a flood loss, the flood adjuster will have written an estimate but he is not a licensed contractor ready and willing to do the repairs.  And if the owner is doing a lot of the work himself, he can lower the cost of repairing the damage (or improvements) considerably less than what it would otherwise cost.

I have only worked in one area where they tried to push to make everyone they could bring the entire house up to code and it was a very high-end community.  As I said in the beginning, it is very subjective and most local officials try to work with the property owners within reason.


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## TimNY (Sep 9, 2010)

Robert Ellenberg said:
			
		

> I'll weight in on this.  Among other things I am a FEMA certified Flood adjuster, licensed contractor and have been involved in bringing houses up to current standards in several coastal communities.It is a local jurisdiction issue and the rules are not hard and fast.  Tax values are not really valid unless you are in a taxing district that states that they asses value at 100% and then show the land separate from the improvements.  The most honest way (the one that would hold up in court) is a certified appraisal from a licensed appraiser for the value of the improvements prior to the damage.
> 
> However, a much less clear question than the value of the propery is what is the value of the damage (that makes up the 50%)?  If this involves a flood loss, the flood adjuster will have written an estimate but he is not a licensed contractor ready and willing to do the repairs.  And if the owner is doing a lot of the work himself, he can lower the cost of repairing the damage (or improvements) considerably less than what it would otherwise cost.
> 
> I have only worked in one area where they tried to push to make everyone they could bring the entire house up to code and it was a very high-end community.  As I said in the beginning, it is very subjective and most local officials try to work with the property owners within reason.


We are at 100% valuation and the value of the land is broken out separately from the improvements by the assessor.  That is why the difference between the assessor's home value and the appraiser's home value is a problem for me.  If the assessor said the house was $100,000 and the appraiser said $150,000 I really wouldn't take issue and give the homeowner the benefit of the doubt.  However, when the assessor says an 850sf house is worth 80k and the appraiser says it's worth 250k, bells start to go off.  I think the math in the "X-Y" approach is reasonable.  However, I'm on the fence as to whether the "X-Y" method is realistic or within the intent of the FEMA regs.

Thanks for your input!

This is not a flood loss, but rather and existing home where substantial improvements are proposed to be made.


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## jar546 (Jul 4, 2013)

FEMA will provide you with an Excel spreadsheet that does it all for you.  For residential, they are not basing it off of dollar amount but percentage of property affected, giving percentage rates for different areas.  In many cases but not all, unless you have 2nd floor damage it is very difficult to get to 50% using their formula unless of course you have foundation or structural damage.  Commercial is a more complicated system but similar in design.  To keep things objective, we used what FEMA gave us.


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## HCW (Mar 6, 2017)

If the purpose of your community is to stifle growth, use low ball 9usually( tax assessor as guide; if you want construction, updated buildings, tax revenue increases, suggest the owner go and get the a cost of replacement valuation and sign off on it!!!!


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## jwilly3879 (Mar 6, 2017)

The FEMA website has the info available on their website or just Google "FEMA substantial damage estimator".


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## snbr2011 (May 12, 2018)

Hi Folks, 

My name is Doug and my wife and I bought a house in a flood zone AE although there has never been any flood on the area. House never had any water issue. However there is a small creek not far from the house across the street behind some of our neighbors house down on a slope. We knew about the insurance which is 2k per year but what's stressing us the most is the whole 50% rule on renovations. We had a CE done and it showed that our LAG is about 8'' below the BFE. We are literally freaking out as to what we should do. We have been searching online for people that have added fill on those low areas to raise the LAG to meet the BFE which is a very small area. Thing is we dont know whats involved in the process. We have been told that the town is a bit restrictive when it comes to flood zones. Any feedback from you knowledgeable folks would help us tremendously.



Thanks

Doug and Kelly


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## mark handler (May 13, 2018)

snbr2011 said:


> Hi Folks,
> 
> My name is Doug and my wife and I bought a house in a flood zone AE although there has never been any flood on the area. House never had any water issue. However there is a small creek not far from the house across the street behind some of our neighbors house down on a slope. We knew about the insurance which is 2k per year but what's stressing us the most is the whole 50% rule on renovations. We had a CE done and it showed that our LAG is about 8'' below the BFE. We are literally freaking out as to what we should do. We have been searching online for people that have added fill on those low areas to raise the LAG to meet the BFE which is a very small area. Thing is we dont know whats involved in the process. We have been told that the town is a bit restrictive when it comes to flood zones. Any feedback from you knowledgeable folks would help us tremendously.
> Thanks
> ...


​http://www.thebuildingcodeforum.com...-of-the-house-to-raise-lag.23088/#post-181622


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## my250r11 (May 14, 2018)

It is best to talk to your local floodplain manager. They will be more helpful because they have more information on the area.


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