Selling a Home? 3 of the Biggest Benefits of an NHD Report In California

Written by Will Caldwell

Looking to finally sell your home in California and turn a profit?

While California offers many beautiful must-see sights and scenes, any homeowner knows just how unpredictable the weather patterns are within the state. From earthquakes to floods and fires, homeowners must always be on the lookout for brewing natural disasters. 

Lucky for you, California Civil Code requires that all real estate sellers and brokers must provide their clients with an NHD report. This provides peace of mind for both the buyer and the seller. If you’re selling your home, disclosing all the possible hazards in your area removes liability in the case that a disaster does occur. In other words, it ensures your legal protection.  

Once a buyer is aware of all the potential natural disasters in their area, the purchase can move forward with an improved feeling of confidence for both parties.

As a seller, it’s important for you to understand just how crucial an NHD report is in the selling process. Just as you were aware of all the risks before moving into your California home, you’ll want to make sure that the new homeowners are just as informed. 

Here are three of the biggest advantages of offering an NHD report in California:

But First, What Are Natural Hazard Disclosures?

Before diving right into the benefits of an NHD report, let’s define what a natural hazard disclosure really is. The natural hazard disclosure, or NHD, report is a document that sellers and real estate agents must obtain for their homebuyers. This document discloses all the potential natural disasters that may or is likely to occur while the homebuyer is residing there.

These hazards include six major natural disasters: special flood zone areas, zones of potential flooding from dam inundation, areas of seismic activity, earthquake fault zones, very high fire severity zone, and wildland fire areas. 

However, NHD reports also provide more information regarding various potential hazards beyond the main natural disasters, like radon gas exposure, fuel odors or noise from nearby airports, and industrial hazards. 

This disclosure gives your homebuyers the chance to weigh the pros and cons of living in that area, and further take the appropriate steps to safeguard their home. 

Sellers and real estate agents can obtain a natural hazard disclosure report through a third-party company. If a third-company party doesn’t provide all the correct information, they can be held responsible, which ultimately protects you as the seller.

1) NHD’s Are a Legal Requirement

Not only is an NHD report convenient, but providing one is also required by the state. According to the 1998 Natural Hazard Disclosure Act, all sellers must comply with this requirement. Buyers then must sign the natural hazard disclosure statement (or NHDS) to let the seller know that they have read and understood the risks of all possible natural hazards. 

One of the main reasons the state requires an NHD report is because it will potentially affect insurance rates. For example, if you’ve just purchased a home in a special flood zone area, normal homeowner’s insurance likely won’t cover any extensive damage. Instead, homeowners should look into the National Flood Insurance Program to obtain special flood insurance. 

Even if you’re selling a home in a special flood zone area, this requirement is just as important for you as it is for the buyer. Not only does this inform the buyer on how to properly protect their new home, but it also eliminates putting yourself in legal jeopardy.

Choosing not to properly disclose all the natural hazard risks places the responsibility on you in the case that one of those natural disasters becomes a reality. But by using a third-party company to obtain an NHD report, transfers responsibility from you onto that company. 

2) NHD’s Can Be Leveraged to Sell a Home Faster

Depending on the time of year, an NHD report can actually help you sell your home faster. 

To illustrate how to let’s continue with the example of a special flood zone: 

You’re looking to sell your home in the wintertime, but flood levels have been particularly high this season, and thousands of residents have had to evacuate. Normally, this would motivate a homeowner to withhold from selling. However, understanding all the “ins’ and “outs” of an NHD report can give you a competitive advantage over other sellers. 

By helping a potential buyer understand all the risks associated with the homes they’re interested in (including your own), you already seem more trustworthy than other sellers. 

As the seller or real estate agent, it’s your duty to make sure the new buyer feels safe and secure throughout the entire purchasing process. Making sure they understand all the details — including the fine print — of a natural hazard disclosure statement can help you sell your home faster.

3) NHD’s Ensure the Safety of Your Family and Your Home

For buyers, the information disclosure in an NHD report can make or break a decision. It’s perfectly understandable that a homeowner would want to do everything in their power to protect their family and their home from a potential disaster. 

For sellers, making sure every key detail is included in that NHD report can ensure protection for both you and the buyer. A natural hazard disclosure acts as a safeguard for both parties — sellers from potential lawsuits, and buyers from the potential occurrence of natural disasters. 

Once a buyer is informed of all the information included in their NHD report, they can take the next step to ensure the safety of their property for years to come. 

Never Overlook the Importance of an NHD Report

Homes are an investment for the future, and as a homebuyer, you don’t want to see your investment be washed away by a flood or engulfed in flames from a wildfire. 

Whether you’re buying or selling a home in California, you can’t ignore a natural hazard disclosure document. NHD reports aren’t overly expensive, and they can be obtained relatively quickly. And since these reports are required by the state, that places an even greater importance on them.

So regardless of your role in the selling process, make sure to move the NHD Report to the top of your priority list — everyone involved in the purchase will thank you for it later.