FEMA 50% Rule Appraisals

What is the FEMA 50% Rule?

If you live in a flood zone, then you have more than likely heard of the National Flood Insurance Program (NFIP). The NFIP is managed by FEMA (Federal Emergency Management Agency), and any community that needs NFIP to be available to its residents and businesses must abide by a set of regulations set by the NFIP. Under the 50% rule, any substantial improvement to a structure cannot exceed 50% of the structures depreciated market value, unless the owner of the property can bring the entire structure up to FEMA standards. FEMA defines substantial improvement as “any reconstruction, rehabilitation, addition or other improvement to a structure, the total cost of which equals or exceeds 50 percent of the market value of the structure before the start of construction of the improvement”. FEMA states “applies to a structure in a Special Flood Hazard Area – or floodplain – for which the total cost of repairs is 50 percent or more of the structure’s market value before the disaster occurred, regardless of the cause of damage.” FEMA will only allow 50% of the depreciated replacement cost to be used when improving your property.

I need a 50% rule appraisal, what do I do?

If you need a 50% rule appraisal, the first thing you should do is obtain an estimate of costs for the repair/renovation work you are seeking to have done on your property. Not all projects fall under the 50% FEMA rule, but many structural additions, reconstruction, or improvement to a building will fall under the rule. Adding in a swimming pool or driveway, however, will not fall under the rule as they are not necessary to a building's structural capabilities. The next step is to find an experienced and qualified appraiser to come and value your property. Mike Cliggitt, MAI, MRICS, CCIM has over two decades of experience in appraisals and is prepared to assist you with the necessary steps of your 50% FEMA rule appraisal. Once you receive your appraisal of depreciated market value of your property (land is not included, just the value of structure), your local city code enforcement will help you determine how much you are able to spend on a renovation/addition to your property. Please note, it does not matter if the renovation to your property is necessary due to a natural disaster such as flooding, the 50% rule states that you cannot make an improvement exceeding 50% of the depreciated market value unless you are able to bring the entire structure up to standards.

Call or email us with questions or to get a quote for a FEMA 50% Rule Appraisal

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