Home's Value - Lead Based Paint Free

[Dean CRCNA]

Hello,

My name is Dean and I'm a new member to this informative board. I am a lead inspector specializing in the new law, Renovation, Repair and Painting (RRP) Rule.

My Question

If you were doing an appraisal on a home built before 1978 and it showed proof (lead inspection report) that the home had NO lead based paint ... how much would it increase the home's value?

1. With the new RRP law. It cost a lot more to do remodeling, repairs and painting on these homes, because a Lead Safe Certified Firm should do the work and their prices are a lot higher. If the home shows LBP free, the buyer wouldn't have to pay these higher prices, since they now can use any contractor.

2. Insurance companies are going up in their premiums to cover the additional cost of a home having to use a Lead Safe Certified Firm. If the home showed to be LBP free ... insurance premiums could remain lower.

This means that homes LBP free would save the new buyer a lot of money over the years. Simply supply/demand would seem to show that a LBP free home would have a higher value ... just don't know if it would be 1% or 10%

I realize that this is a new area, so looking for any opinions.

On another note

If you have any questions for a lead inspector, I would be most happy to try and answer them for you.

Dean

 

[Jerry Bone Jr]

the home had NO lead based paint ... how much would it increase the home's value?

The value difference might/would be different for each individual home. Welcome to the forum.

 

[residentialguy]

Hello,

My name is Dean and I'm a new member to this informative board. I am a lead inspector specializing in the new law, Renovation, Repair and Painting (RRP) Rule.

My Question

If you were doing an appraisal on a home built before 1978 and it showed proof (lead inspection report) that the home had NO lead based paint ... how much would it increase the home's value?

1. With the new RRP law. It cost a lot more to do remodeling, repairs and painting on these homes, because a Lead Safe Certified Firm should do the work and their prices are a lot higher. If the home shows LBP free, the buyer wouldn't have to pay these higher prices, since they now can use any contractor.

2. Insurance companies are going up in their premiums to cover the additional cost of a home having to use a Lead Safe Certified Firm. If the home showed to be LBP free ... insurance premiums could remain lower.

This means that homes LBP free would save the new buyer a lot of money over the years. Simply supply/demand would seem to show that a LBP free home would have a higher value ... just don't know if it would be 1% or 10%

I realize that this is a new area, so looking for any opinions.

On another note

If you have any questions for a lead inspector, I would be most happy to try and answer them for you.

Dean

Hey Dean,

Welcome to the forum. Glad you're here.

Personally, I wouldn't care about having a lead free home. As long as the lead is encapsulated, there is little danger. I would not give it any more value, unless the market could show me that there is. So far it hasn't.

As far as insurance premiums lowered....again, you have to look at contributory value. Green houses that save you much much more than this are not showing much value added, in the Twin Cities anyway. People don't seem to look that far ahead. There may be some parts that are very "progressive" and rich environmentalists may pay a premium for it.

I just appraised a new construction LEED home...very strict environmental control with lots of operating savings and rebates to be had. Cost to build was about $275,000 - 300,000k. It sold for 156,000 with 3% seller paids.


I do have a question. For lead paint removal from a chipping paint older home, do you need to be certified in handling lead paint and still use a special encapsulatingpaint to repaint?
This is what I typically state on FHA. I want to make sure it is accurate:
Repair is required for property to meet HUD/FHA minimum property requirements (MPR). FHA approved encapsulating paint (that conforms to ASTM Standard E-1795) should be used on lead based paint issues and all loose paint chips are to be removed from site and properly disposed by contractors certified in handling lead base paint.

Thanks!

 

[David Mescon]

Hi Dean and welcome. The only way it would increase a home's value is if the market says it would. In other words, there would have to be some market precedent supporting such a differential. In all honesty, I seriously doubt it would have any discernable impact upon a home's value in most markets, but that would remain to be seen. Good luck.

 

[Peacemaker]

1. With the new RRP law. It cost a lot more to do remodeling, repairs and painting on these homes, because a Lead Safe Certified Firm should do the work and their prices are a lot higher. If the home shows LBP free, the buyer wouldn't have to pay these higher prices, since they now can use any contractor.

Do you expect this law to actually be enforced? Or do you expect investors/flippers/contractors to chuckle about it, while they hire the low-bid crew to do the work in the fastest, cheapest manner possible?

I wish you well in your endeavor. But after seeing a lot of unethical behavior among participants in the real estate market, and little to no enforcement of existing laws, I am not optimistic.

But to answer your original question: an appraiser would have to be able to discern a pattern in any given market, that homes with this certification sell for more than homes without it, when all other factors are equal. And support that with data, to the satisfaction of the lenders. Lenders don't like anything atypical, generally, and I suspect the first underwriter who comes across an adjustment for this might find their head popping off and exploding. And really, the question you should be asking is: are banks willing to LOAN more on houses with this certification, because if the answer is no, then the appraisers are not going to be able to see this in the closed transactions and apply it in their work.

And a question for you: you state that a proper remodel is more expensive. Can you perhaps post some real life examples? I'm curious, how much more expensive?

 

[Dean CRCNA]

Everyone,

Thanks for the replies so far.

I may be a little early on this subject, since homeowners are just now learning about the RRP. But from early indications, buyers who know about the RRP would much prefer a lead free home.

I do have a question. For lead paint removal from a chipping paint older home, do you need to be certified in handling lead paint and still use a special encapsulatingpaint to repaint?
This is what I typically state on FHA. I want to make sure it is accurate:
Repair is required for property to meet HUD/FHA minimum property requirements (MPR). FHA approved encapsulating paint (that conforms to ASTM Standard E-1795) should be used on lead based paint issues and all loose paint chips are to be removed from site and properly disposed by contractors certified in handling lead base paint. Thanks!

The answer depends on the type and amount of FHA (HUD) assistance and if it really is HUD assisted and what type of FHA assistance is being done.

An example; if a pre-1978 home using FHA insurance ... it doesn't fall under the Lead Safe Housing Rule. It would fall under the RRP Rule. This is per the HUD enforcement branch.

If the repairs/renovations are for abatement/encapsulating a certified abatement company must be used. If the repairs/renovations are just for home improvement a Lead Safe Certified Firm must be used.

Long story short, it depends

 

[Dean CRCNA]

Do you expect this law to actually be enforced? Or do you expect investors/flippers/contractors to chuckle about it, while they hire the low-bid crew to do the work in the fastest, cheapest manner possible?


And a question for you: you state that a proper remodel is more expensive. Can you perhaps post some real life examples? I'm curious, how much more expensive?

The enforcement of the RRP will be determined by the Lead Safe Certified Firms snitching on illegal contractors. The EPA has stated that most of the enforcement will be initiated by homeowners, neighbors and Lead Safe Certified Firms letting them (EPA) know about non-compliance.

Another possible enforcement area could be lawyers. The RRP can easily turn into an asbestos future with lawyers getting on TV and trying to drum up clients.

Right now, investors/flippers/contractors/Realtors/property managers are not paying much attention to this. Contractors are paying more attention than the other groups. At this time, there are around 500,000 Lead Safe Certified Firms. The main motivation is the $37,500 fine per day per incident and even possible jail time. So it is not behaving like other laws that have been ignored, but it still has a long way to go.

On your second question ... an average of 10 to 20% increase in cost to do the lead safe work requirements, would be a good figure to use.

Note: Not only am I a lead inspector, but did the training to be a Certified Renovator and have actually participated in remodels/repairs following compliance. It is not fun

 

[Lee Lansford]

At this point, any response would be mere conjecture.

If I can offer a generalization on this topic: I see many "seller's disclosures" (required) regarding this matter and the overwhelming majority of sellers "disclose" (in words to this effect) that they have no idea whether lead-based paint might be present.

Though I am certainly not all-knowing, I suspect that for the vast majority of buyers and sellers this is a non-issue (unless it were disclose that "YES, there's lead-based paint present and paint is flaking everywhere"). But, again, for the most part, a non-issue.

 

[Dean CRCNA]

At this point, any response would be mere conjecture.

If I can offer a generalization on this topic: I see many "seller's disclosures" (required) regarding this matter and the overwhelming majority of sellers "disclose" (in words to this effect) that they have no idea whether lead-based paint might be present.

Though I am certainly not all-knowing, I suspect that for the vast majority of buyers and sellers this is a non-issue (unless it were disclose that "YES, there's lead-based paint present and paint is flaking everywhere"). But, again, for the most part, a non-issue.

I would agree with you at this time. In the future????

It is interesting that with this new law, lead disclosure will change. Here is my reasoning ...

1. The RRP is all about creating and properly cleaning up lead hazards. Accordingly, if a homeowner or non-certified contractor does work on the home ... lead hazards existing in the home must be assumed.

2. A recent change in the RRP. Lead Safe Certified Firms are required to give a checklist to the homeowner at the completion of the project. This checklist should be given during the sell of the home, since it has to do with lead.

3. In July 2011, clearance testing (by a lead inspector/assessor or dust technician) will need to be done by the Lead Safe Certified Firm after certain projects. The results will be given to the homeowner. If the home has lead based paint, the clearance will show lead is in the home (but at a proper level to allow for the clearance test to be passed)

This new law is a dramatic change.

 

[Mr Rex]

But homeowners can do their own painting and provide an affadavit that says they didn't employ a professional. I suspect there will be alot of 90 year old widows doing their own painting in the near future.