Personally I'd remove it from the National Flood Insurance Program. If the buyer can get a private company to insure it then the sale can go through. If the buyer cannot get a private company to insure it then the sale can only go through if they are not using a mortgage (mortgaged properties legally have to carry flood insurance). Couple this with plenty of disclosures so the buyer is aware they are taking on significant risk.

Any property bought by the government under these conditions would be condemned.

Doesn't matter if it's beachfront - there shouldn't be a home on a beach that sees significant hurricane damage every year.

Yes, I am saying that it could be desirable for the owner to refuse a buyout and sell it to someone other than the government.

Yeah, we'd have to condemn the home as part of the process to avoid that. Or at least flag it as uninsurable, so any buyer would have to bring cash and be willing to eat a total loss.

I'm not sure the federal government has the power to do anything other than refuse to insure it under their program.