Yellow caution tape surrounds a sinkhole in front of a Leominster house on Sept. 12, 2023, after a storm flooded the city with more than 9 inches of rain the night before. Photo by Michael Casey | Associated Press
Rainstorms and coastal flooding are getting worse, but homebuyers and sellers in Massachusetts aren’t too worried about climate risks affecting their home search or home-selling process. But with flood disclosures not required by state law, where does that leave the state’s real estate agents?
The issue flooded back into the industry’s consciousness this month when Zillow removed climate risk scores from its listings that had been developed by insurance consulting nonprofit First Street. The portal’s listing pages now only link to First Street’s climate risk analysis website, where prospective buyers can still find information about a property’s risks.
The move was due to complaints from the California Association of Realtors, according to The New York Times, which reportedly claimed the data was inaccurate at the parcel level and depressed home sale prices.
First Street rejected claims its data is inaccurate.
“When buyers lack access to clear climate-risk information, they make the biggest financial decision of their lives while flying blind,” Matthew Eby, founder and CEO of First Street, said in a statement to Banker & Tradesman. “The risk doesn’t go away; it just moves from a pre-purchase decision into a post-purchase liability. Families discover after a flood that they should have purchased flood insurance, or discover after the sale that wildfire insurance is unaffordable or unavailable in their area.”
Massachusetts real estate agents say their experience with how worried buyers are about climate risks can vary. On Cape Cod and in Greater Boston, clients don’t often express much concern to their agents about potential flood risks for homes they’re looking at.
“It really is just business as usual,” said Dino Confalone incoming chair of the Greater Boston Real Estate Board. “The number-one thing for the agents on our side is disclosure. Like, over-disclosure, full due diligence disclosure. We really want to try to get that education out there.”
Different Buyers, Different Attitudes
Who a client is and where they’re buying can affect how much they fear the increasing power of floods and storms, agents say.
Luxury buyers on Cape Cod are willing to pay for properties on the waterfront even if those homes run the risk of falling into the ocean in the future.
“I think our market – and a lot of coastal markets – are not necessarily seeing a decline in interest in areas that have higher risk factors, because the risk factor is usually what makes it attractive,” Cape Cod & Islands Association of Realtors CEO Betsy Hanson said. “Being in the floodplain means that you’re waterfront.”
A prominent Wellfleet mansion demolished in February after erosion came right up to its sliding glass doors still sold to its final owner for $5.5 million in 2021.
But in Leominster, the risk is somewhat more front-of-mind. The city suffered a major flood from a sudden, powerful storm in 2023 that took more than a year to recover from. Scientists say the risk of inland flooding from storms like this is increasing.
While he hasn’t experienced any local sellers putting their homes on the market due to newfound flood risks, Leominster real estate agent Matthew Straight said the increasing costs of flood insurance could have knock-on effects when someone goes to sell their home, even outside of FEMA-designated flood zones.
“If your home is in an area that there‘s a lot of natural disasters. Well, guess what? Your premium is going to go up,” the Coldwell Banker agent said. “So of course, it affects the affordability of a buyer and what happens? It makes it more difficult for a seller to sell, because if the buyer is having issues with getting affordable insurance, well, it‘s going to be an issue.”
Storm clouds loom over a pair of coastal Cape Cod houses. Agents say that most buyers and sellers still don’t express much concern over climate risks despite the increasing frequency of severe weather. iStock photo
Mandatory Flood Disclosures Proposed
Under state law, real estate agents aren’t required to disclose a property‘s flood risk or past damages. Still, agents interviewed for this story say this is a practice that any professional should follow whether they are a buyer’s agent or seller’s agent.
Conservations regarding flood risk or advice on flood insurance can be worked into in an agent’s initial consultations regarding homes, they said. Agents can also use Federal Emergency Management Agency flood maps and Massachusetts Bureau of Geographic Information maps.
Additionally, mortgage lenders often research to see if a property needs flood insurance based on federal flood maps, although First Street researchers say even new FEMA maps underestimate flood risk over the potential life of a mortgage. And in cash deals, it’s possible for information regarding past floods to be left out of discussions, entirely.
But Gov. Maura Healey is looking to formalize flood disclosures make a standardized notification form required for individuals purchasing a home or signing a lease.
“Flood risk is something that exists across the state, whether you‘re in a coastal area or near a river or other body,” Katherine Antos, the undersecretary for decarbonization and resilience at the Massachusetts Executive Office of Energy and Environmental Affairs said in an interview. “We even see it in some areas that aren‘t close to a water body but because of extreme rainfall events, it‘s just more than the ground can handle, or pipes in the ground can handle.”
The disclosure requirement, included in a sweeping climate change preparedness bill Healey filed this summer, is “important as a consumer protection measure,” Antos said.
Sam Lattof
Some Agents Frustrated by Disclosure Plan
Some industry leaders are largely supportive of the initiative.
“We are in favor of making sure that information about the property is available but also making sure that there is a level of guidance or advice on that information,” said Hanson, the Cape Cod trade group leader. “Sometimes just seeing a number or seeing a bit of information without qualification or understanding what that really means can be a little bit difficult for someone who maybe isn‘t as familiar with the topic.”
The Massachusetts Association of Realtors hasn’t yet taken a position on the disclosure requirement. But opinions appear to differ among some rank-and-file agents.
Sometimes homeowners can honestly forget incidents, said Leominster Coldwell Banker agent Lana Kopsala, so requiring flood disclosures and making buyers aware of incidents where insurance was involved is important. For most buyers, she said, knowing that there was a flood incident at some point in the past won’t be enough to make them fall out of love with a home.
“It‘s not going to stop them from loving the house, because it‘s an emotion and feeling that people have but I think it‘s in a very important information because it‘s only going to educate each consumer along the way,” she said. “The more you disclose, the more comfort the buyer is going to feel.”
Yet some agents are also pushing back over what they see as more regulation of their industry following hot on the heels of new commission rules in the wake of the National Association of Realtors’ antitrust lawsuit settlements last year.
“I am of the mindset to not be over-regulated,” GBREB’s Confalone said. “It is unfortunate that we‘re at that situation, that we‘re being forced, because there‘s been a lot of regulation within the last year within the real estate industry, forcing people or agents to do certain things and it‘s frustrating.”
Also frustrating, he added: The threat that some agents might not be disclosing climate risk when they represent homes.
“The good agents like myself that are disclosing, over-disclosing, communicating, we‘re frustrated with the ones that aren‘t doing it. I‘m not going to say ‘no’ to it, but it‘s just frustrating that we‘re at that point where we just can‘t all work on the same level,” Confalone said.
