Contaminated Well

[ClemsonCatfish]

This is an interesting case. Completed an inspection yesterday, and the subject (and many other homes in the neighborhood) have wells that are contaminated with a variety of "forever chemicals" due to fire fighting equipment at an adjacent airport. When it first came out, I remember a couple brief news articles, but didn't realize this was the neighborhood until I arrived and became suspicious before I even pulled in the driveway. Apparently the fire crews have to practice fighting airplane fires with these substances, and over the years the chemicals have made their way into the downhill aquifer. The wells are not usable, and the legal arrangement the state DEP came to was to make the airport install water filtration systems in all the impacted homes. The filtration systems have provided a small measure of help, but the subject homeowner provided me with his most recent water testing results. The subject water is still not safe to drink, they drink bottled water that I believe the airport is supplying them with. Obviously, there is an impact on value and marketability for the impacted homes.

No homes impacted have sold in this neighborhood in the last several years (really since the news broke I believe). The house next door was listed a couple years ago, but after several price drops the listing was canceled.

There is still ongoing legal cases, and the law firm representing the house I inspected hired an appraiser to do a study on the impact to value and marketability due to the contamination. The homeowner shared this report with me. To summarize this report greatly, the appraiser explained there are no paired sales, so he used mostly interviews with local real estate agents and officials, and also similar examples from other states to come up with a % decrease in value.

Since there are no paired sales available from the subject neighborhood (maybe I should've left after I was first told of the contamination!), the impact to value and marketability has expanded outside the scope of work of this assignment. The only way I could possibly complete the assignment would be to rely on the % deduction in value from the report shared with me.

This is for a mid-sized regional bank that follows fannie/freddie guidelines.

My question is: Can I use the conclusions shared with me from the other appraisers report to make adjustments? If so, I would add assumptions and summarize how the % was concluded.

Appreciate your time and thoughts.

 

[CGinMN]

For GSE loans, wells have to meet community standards. If contamination is suspected, a well certification is needed. It doesn't sound like this property would be able to pass certification. Point this out to the lender and they will likely determine the property is ineligible for financing at their institution. One of several reasons why the contamination damages the market value and marketability

 

[TerryRohrer]

There is no value whatsoever in the conclusions in the report that was shared with you. What possible basis could there be to a flat-out guess when everyone involved says there is no data by which to measure the impact? Not a chance in hell I would rely on that for anything. The noted methodology is simply a statement about what a low bar "support" is in the appraisal business these days, not a useful appraisal methodology. Unless your fee in in excess of $10,000, I would explain what you know to the client and move on (I would ask for a trip fee unless there is a map showing the area where the plume has been detected, in which case it was your oversight and I would just move on).

 

[JTip]

Intended use, intended user for the report?

 

[lostinthezone]

This is an interesting case. Completed an inspection yesterday, and the subject (and many other homes in the neighborhood) have wells that are contaminated with a variety of "forever chemicals" due to fire fighting equipment at an adjacent airport. When it first came out, I remember a couple brief news articles, but didn't realize this was the neighborhood until I arrived and became suspicious before I even pulled in the driveway. Apparently the fire crews have to practice fighting airplane fires with these substances, and over the years the chemicals have made their way into the downhill aquifer. The wells are not usable, and the legal arrangement the state DEP came to was to make the airport install water filtration systems in all the impacted homes. The filtration systems have provided a small measure of help, but the subject homeowner provided me with his most recent water testing results. The subject water is still not safe to drink, they drink bottled water that I believe the airport is supplying them with. Obviously, there is an impact on value and marketability for the impacted homes.

No homes impacted have sold in this neighborhood in the last several years (really since the news broke I believe). The house next door was listed a couple years ago, but after several price drops the listing was canceled.

There is still ongoing legal cases, and the law firm representing the house I inspected hired an appraiser to do a study on the impact to value and marketability due to the contamination. The homeowner shared this report with me. To summarize this report greatly, the appraiser explained there are no paired sales, so he used mostly interviews with local real estate agents and officials, and also similar examples from other states to come up with a % decrease in value.

Since there are no paired sales available from the subject neighborhood (maybe I should've left after I was first told of the contamination!), the impact to value and marketability has expanded outside the scope of work of this assignment. The only way I could possibly complete the assignment would be to rely on the % deduction in value from the report shared with me.

This is for a mid-sized regional bank that follows fannie/freddie guidelines.

My question is: Can I use the conclusions shared with me from the other appraisers report to make adjustments? If so, I would add assumptions and summarize how the % was concluded.

Appreciate your time and thoughts.

Assuming that this is for a loan which will be sold to GSE's, you're going to have to come up with a value based on the condition and analyze/describe the effect on marketability at a minimum, and likely call for an inspection. I'd check in with the lender first and explain the situation. My guess is they will likely ask you to cancel it so don't spend a ton of work on it before you chat with them.

If you continue with the assignment, in terms of an adjustment, you can't rely on the previous appraiser's work even if you have a detailed accounting of how they arrived at their conclusion and can confirm the methodology and data they used. You will have to make your own analysis of it and describe it in detail. If you do your own fresh analysis, use what data you have locally. The listing that didn't sell could be used as a data point to demonstrate the effect on marketability when you compare it to similar houses in that time frame. You'll likely have to expand your data search to other markets and go back in time to pull out a percentage adjustment for similarly affected properties with environmental conditions. Tough assignment, I've had to work with these before around old decommissioned military installations that were developed into residential housing and contained hazardous waste and buried munitions. You may want to look at those types of properties/data and research oil spills, proximity to landfills and the like.

Read the GSE requirements here:

https://singlefamily.fanniemae.com/media/45916/display

B4-1.4-08, Environmental Hazards Appraisal Requirements(06/04/2025)

Freddie Mac Single-Family Seller/Servicer Guide

The new, user friendly Seller/Servicer Guide will make it significantly easier for you and your team to find, understand and share critical information.

guide.freddiemac.com

 

[Sadie]

As an aside, you can look into costs to cure. This is an ongoing situation in Eastern Oregon and some properties have had mitigation. its expensive and most people in the area don't have the funds to do this. Look at what other places do in these situations. I do believe most people are stuck with what they have because the value of their homes is pennies on the dollar compared to what they paid.

 

[sputnam]

This is an interesting case. Completed an inspection yesterday, and the subject (and many other homes in the neighborhood) have wells that are contaminated with a variety of "forever chemicals" due to fire fighting equipment at an adjacent airport. When it first came out, I remember a couple brief news articles, but didn't realize this was the neighborhood until I arrived and became suspicious before I even pulled in the driveway. Apparently the fire crews have to practice fighting airplane fires with these substances, and over the years the chemicals have made their way into the downhill aquifer. The wells are not usable, and the legal arrangement the state DEP came to was to make the airport install water filtration systems in all the impacted homes. The filtration systems have provided a small measure of help, but the subject homeowner provided me with his most recent water testing results. The subject water is still not safe to drink, they drink bottled water that I believe the airport is supplying them with. Obviously, there is an impact on value and marketability for the impacted homes.

No homes impacted have sold in this neighborhood in the last several years (really since the news broke I believe). The house next door was listed a couple years ago, but after several price drops the listing was canceled.

There is still ongoing legal cases, and the law firm representing the house I inspected hired an appraiser to do a study on the impact to value and marketability due to the contamination. The homeowner shared this report with me. To summarize this report greatly, the appraiser explained there are no paired sales, so he used mostly interviews with local real estate agents and officials, and also similar examples from other states to come up with a % decrease in value.

Since there are no paired sales available from the subject neighborhood (maybe I should've left after I was first told of the contamination!), the impact to value and marketability has expanded outside the scope of work of this assignment. The only way I could possibly complete the assignment would be to rely on the % deduction in value from the report shared with me.

This is for a mid-sized regional bank that follows fannie/freddie guidelines.

My question is: Can I use the conclusions shared with me from the other appraisers report to make adjustments? If so, I would add assumptions and summarize how the % was concluded.

Appreciate your time and thoughts.

It would be better if the appraisers shared the data they used to form those conclusions so you can come to your own opinion. If that's not possible, then you can still use their conclusions. Your report needs to be clear about it though. Conversations with market participants is an accepted method of gathering information.

 

[Sadie]

It would be better if the appraisers shared the data they used to form those conclusions so you can come to your own opinion. If that's not possible, then you can still use their conclusions. Your report needs to be clear about it though. Conversations with market participants is an accepted method of gathering information.

I think incorporating the other reports in n would be problematic. But you can look at the data and data sources in the reports as a basis for your report and make your own conclusions.

 

[ClemsonCatfish]

Intended use, intended user for the report?

JTip-it was for a conv refi. I appreciate all the comments. I spoke with the lender and let them know about the contamination, and as several have speculated, the order has been canceled.

 

[Zoe]

You will have to provide an expert report from like an engineer that is like a conservation specialist that knows if it can be cured and provide a cost to cure.

You can't pull an adjustment out of the air. You could base an adjustment from a report from a specialist with license and degree in that field.

Their liability insurance would cover their report.