Frustrated.... questions about Lenders/Realtors

[Tom D]

a value as is with extensive mold, i would not do. you cannot see the hidden mold, or is anybody here that could. i read in 1 case that the whole house had to be taken down it was so bad.
so your as is value might not be that accurate in a very mold distressed home, not considering what might be hidden.
and i talk to whomever i please, and it has never come back to bite me. probable helped with someone not complaining. but, there are some too stupid, or too arrogant, that i would never talk to.
by the way, what is confidential about the mold that everyone involved seems to know about. oh wait, that's standard mold SR5.a.
i also agree with grant's way of not talking, it's a business decision.

 

[Elliott]

OP asked, "Do banks actually ever close on houses with mold that isn't remediated."

No. Black mold is a 'drop dead' issue. I was involved in a insurance case where there was a 'spring' in the corner of the house that caused black mold to permeate the floors and walls (tiny black dot). No lender is 'knowingly' going to go forward until remediation is complete. Why would anyone take on the responsibility of letting it slide?

 

[Terrel L. Shields]

a value as is with extensive mold, i would not do. you cannot see the hidden mold, or is anybody here that could. i read in 1 case that the whole house had to be taken down it was so bad.

Why would anyone take on the responsibility of letting it slide?

The worse case of it I've seen was a situation where it was being purchased to be gifted to a University. I came in about 60% less than contract. Not one single bit of mold was visible. BUT my ready assistant and her sensitive nose said, 'There is mold here.' (nice to have such an assistant.) And things did not add up. It was a finished basement. It had CHA ducts, but there were 2 space gas stoves in the lower area and post-construction piping from a propane tank outside. Why heat a heated downstairs? Then there were a few missing 1" tiles in the shower??? And the walls appeared to have been freshly painted. Sure enough, on a shelf in that downstairs was a large can of Kilz. They had covered up the mold...which is no solution.

I reported that my recommendation was that they have a mold and home inspection performed. The "as is" value assuming no mold was X dollars. They had given me a copy of another appraisal done a few months earlier by a Tulsa 'flat land' appraiser who called the walk out basement to the house a 2 story log home. He had almost doubled the value I came up with and wildly over the contract (which wasn't a fact then.) The logs were all on the upper level and not a single log below grade. In the end, the lady bought the house, the University then sold it for near my price upon the recommendation of the broker, who had started out in this very development as an 18-year-old employee of the development company. She had sold Real Estate there for 30 years. The lady donating, when finding out her gifting would not pass muster 100% with the IRS, ended up suing the sellers and they quickly settled once the mold issue was brought up.

In my opinion, these are almost irrepairable. The problem was inadequate drainage behind the walls of the basement, combined with a lack of proper sealing of that basement wall (which was concrete and block)... Regionally, so few basements are built here, not one in 4 carpenters know how to properly build a French drain and seal both the in and outside of these walls. The secret to avoiding basement mold is to drain the water from behind the wall and too many simply backfill with the native soil and that does not help.

 

[Surf Cat]

This realtor has been around a while and I feel like this shouldn't be a surprise, but they think because the purchase price is so
low, it should be able to close as-is? Does anyone have any experience with this?

The price isn't low enough...the remediation costs may be so substantial that the deal will fall through. It's going take weeks to resolve that issue.....if they can.

Hopefully you took lots of photos. Make mention of the issue in several areas of the report....CYA

 

[shrubberyvaluation]

If the realtor knows about the mold I don't see how its a surprise.

 

[Surf Cat]

If the realtor knows about the mold I don't see how its a surprise.

The realtor was trying to get away with having their client not pay for the remediation with the lower price. The realtor knew exactly what they were doing...

Problem is....the buyer needs a loan and now that the cat's out of the bag.....the lender now knows...this deal is going to fall through.

 

[George Hatch]

"Won't" talk to anyone about the physical condition

is a different situation than​

"Can't" talk to anyone about the physical condition due to instructions from the client as per the terms of the assignment.

 

[andrew81]

When performing FHA/USDA/VA assignments that are completed subject to hypothetical conditions, only after the report has been submitted, I will discuss with the buyer, seller, and their agents the repair conditions. In my experience often times the borrower has been told the conditions, and not actually received the information in writing. It is helpful to discuss with the parties involved exactly what the conditions are and the level of completion that is expected for me to sign off on a completion report.

With regard to confidentiality, physical characteristics that do not include an appraiser’s opinion, are not confidential assignment results.

 

[Tom4value]

Is this a conforming or non-conforming loan? (i.e- conforming is secondary market, non-conforming is in-house loan.) The in house bank will want an as is value. Secondary market is likely going to want a subject to value. So go back to the lender/AMC and ask for directions. So who ID'd the mold? Are you a mold expert? Did they hire a home inspector, etc. Non-conforming lenders do frequently close on houses with mold or potential mold.

Really, Terrel? I have been following you for a long time and respecting your expertise. I know you know that we have to do the, “see something, say something “ and you know that if is a potential health issue, it doesn’t matter if it is conventional or FHA.

 

[Tom4value]

I'm currently appraising a property that has a positive mold test (black mold). First, the realtor did not disclose this before the inspection and so I went in not masked, etc. I went back to my client and
asked how they wanted the appraisal completed, as the purchase price reflects the need for remediation. They of course said, subject-to remediation. Now the Realtor is calling asking what the
conditions are that the report is going to be subject to because I need a few days to complete. I know I can't say anything to them, but wouldn't the lender tell them what was coming down the pipe?
Do banks actually ever close on houses with mold that isn't remediated. This realtor has been around a while and I feel like this shouldn't be a surprise, but they think because the purchase price is so
low, it should be able to close as-is? Does anyone have any experience with this?

Thanks for any insight.

Yes, I have. You didn’t say if the mold was in the attic (which the broker may not have seen) or in the basement (where they should have seen). Since the broker asked the question, do they know about the mold? If so, they either did know or were told by the LO. Either way, the way to deal with it is to tell the broker to wait until you have direction from the underwriter. A good lender will tell the broker directly.