Hi everyone. I am keeping an eye on a house that is reduced drastically due to a black mold problem. It is bank owned and been on the market for well over a year because nobody wants to deal with the mold.
House across the street is same exact model; sold for $155K last month. This home is listed for $62K. Walked the outside of the home and looked in the windows and if I didn’t already know about the mold problem, it would appear to be a turnkey property.
My question(s) is this; what are your experiences with selling homes that had prior mold problems? Even though the mold issue will be remediated by a professional and will have documentation to prove it, it still needs to be disclosed to the end buyer, correct? In your experience, how much have you had to dicount the selling price because of the past mold problem? So if comps came in at $150K, what would be a realistic selling price given the issue? My exit strategy is still unknown. I am thinking of holding it as a rental. I am assuming that the issue still needs to be disclosed to the tenants, right?
Because the real estate/mortgage industry is in shambles here in Michigan coupled with the fact that everybody is scared of mold issues, I am thinking I can get this property for significantly less than the asking price. Depending on what everyone else’s experiences are with the re-sale/renting of these homes, I am thinking I have a deal here.
Thank you for your experiences and advice ahead of time.
You will have to disclose the previous mold issue. But…what I suggest you do is offer $30,000 CASH for the house with a close in 5 days. Make that offer on the first of every month to the bank. Eventually they may take it. It is only a matter of time before they decide to pull the plug. Winter is coming. (Banks hate winters)
At that number the land alone is worth buying. Bottom line is if it still hasn’t sold at $62K it’s still too much. Markets are efficient. Price something cheap enough and it will move.
Black mold scares people. In a real estate market were there is nothing but inventory out there people and banks are not going to roll the dice on some thing like this when they can look at thousands of other houses that don’t have problems.
Having said that…if you can get it for $30K here’s what I would do.
Have it professionally remediated. Then air tested. List it with the condition that YOU (the seller) will pay for testing by a lab of the buyers choice. (as long as the lab is Certified) to prove the home is COMPLETELY free of mold. I would even go one step further and ask potential buyers if they plan on testing ALL the homes their looking at. After all, those homes could in fact contain mold that even the seller is unaware of. By purchasing (YOUR) house they are actually getting a written warranty that the home is COMPLETELY free of any mold.
It’s all spin. That mold issue could actually make your home stand out if you market and PRICE it correctly. It will never sell for what an uncontaminanted home will sell for. It’s like a car that’s been involved in an accident. It can be fixed by the greatest body shop on earth. They can repair it better than when it left the factory, it STILL was in an accident. That doesn’t mean a dealer can’t make money on it though!!
Thanks for your insight fdjake. Good idea about offering to pay for the testing. To all those that have rehabbed a black mold house, what kind of ballpark estimates am I looking at for remediation? Assuming that it is totally infested?
Another question. If this home has absolutely no evidence of black mold as far as on the walls and ceilings, etc., how bad could it be? Is it feasible to have a bad infestation without some sign of mold on the walls? Home has brand new roof on it, so a leaky roof may be the culprit for the infiltration, however, the side yard has a very steep incline towards the home as well. Is there a huge price difference in the remediation if the mold is coming from the foundation? i would assume the labor would be fairly difficult as it is on a crawl.
There is no way to give you an estimate without seeing the house.
What I would do since it IS listed, is set up an appointment for a showing with the listing agent. Have that appointment on the same date and time as your mold abatement contractors schedule for an estimate. (call him first, then set it up with the realtor) Don’t even mention the inspection to the realtor. Just have him show up. You can then tell her he’s doing an inspection for you. That is THE only way to go into this without the potential for a huge loss on your part.
Could be easy cleanup and it could require all new drywall and insulation. Could be easy, could be hard. Could also be an easy or expensive fix for the water source that’s causing the mold. Fdjake had a good suggestion in using a pro to determine what needs to be done, if you can get him to provide a free quote you’ve spent nothing and potentially saved THOUSANDS.
Hey Tim, one other thing. If you can get that quote for mold abatement it maybe a beautiful bargaining tool for use with the bank. If like Rich said it’s not that bad, don’t say a word, just make the offer.
Sorry to keep this thread going with these mold questions but I am learning quite a bit here. How hard is it to get a former mold home insured? Seems like the insurance companies would view this as a pretty hefty liability. Any experience with that?
It has nothing to do with insurance. I’ve bought homes that where completely water damaged and insured them with no problem. But be advised this type of insurance is for fire and loss. It’s not going to cover repairs for mold damage, obviously.
The way this will work is, if you buy the home, before the closing, you get your insurance lined up. You tell the agent you purchased the home and will be making repairs. All you want on it is fire and catastrophic loss (hurricane hits it) They’ll write the policy. Once it’s fixed it’s really no different than a home that was once damaged by fire. The insurance company will come out to inspect it after it’s repaired, they’ll look at your mold abatement paper work and test results and sign off.
I personally think this whole black mold thing is like radon. It’s been around for thousands of years, people are now just learning how to make money off it… I know, some people are highly allergic to it but come on, living in a house with 20 cats isn’t healthy either. And people do that everyday. At least the nit wits who’s homes I look at. Oh and that lovely cat piss smell? Nothing better for allergies on a 95 degree day!
I personally think this whole black mold thing is like radon. It's been around for thousands of years, people are now just learning how to make money off it.. I know, some people are highly allergic to it but come on, living in a house with 20 cats isn't healthy either. And people do that everyday. At least the nit wits who's homes I look at. Oh and that lovely cat piss smell? Nothing better for allergies on a 95 degree day!
Fdjake is RIGHT ON! This mold nonsense is just the latest scam by the contingency lawyers to extort money from various people. It is simply ridiculous! I have bought houses with mold on many occassions. I fixed the moisture issue; cleaned the mold up with dishwashing detergent and water; sealed the drywall with KILZ; and then painted. BINGO - no more mold!
I’ve seen a lot of black mold on walls and that’s just in the homes I’ve lived in. It crops up all the time in bathrooms, especially since I’ve only lived in older houses (1920’s) that don’t have vent fans (newer houses it is required in my area). The ONLY time mold has ever caused me any health issues is sweeping up the floors in the storage area where I work, there was dried old mold under a bookshelf that was moved and breathing in the dust gave me issues breathing for a few hours after breathing it in.
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Fdjake is RIGHT ON! This mold nonsense is just the latest scam by the contingency lawyers to extort money from various people. It is simply ridiculous! I have bought houses with mold on many occassions. I fixed the moisture issue; cleaned the mold up with dishwashing detergent and water; sealed the drywall with KILZ; and then painted. BINGO - no more mold!
Mike
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Yes, I agree completely with you and fdjake on this. As a matter of fact, I’m willing to bet most everyone on this board agrees with you. The problem is the general public who will be purchasing these homes are taught to cut and run without asking questions when they hear the word “mold”.
I would love to hear more creative ideas to counter this problem when trying to resell. Offering to pay for the end buyer’s mold test is a great suggestion. Any others?
Not to change the subject but if it is a bank owned property I wouldn’t wait until the beginning of every month to make an offer but would do it in the last few business days of the month. It you make offers on the 1st of the month that house will already be on the books for that month. My two little cents…