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Mold Infected Condo

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Tom Curran

Sophomore Member
Joined
Oct 18, 2002
Help!! Just inspected a condo that is being foreclosed on. In order to enter the home I was required to wear a Haz Mat suit with gas mask! It seems the house has incredible amounts of airborne Mold. The lady who lived there is very sick from living in the house as well as her dog. All furniture in the home has to be destroyed. The owner said they are going to have to gut the entire Condo. Owner is suing both the Homeowners Assoc and her neighbors who built a porch that messed up the drainage causing her basement to take on water.

Anybody got an idea of how I proceed? :cry:
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Are you sure you want too?? I rarely turn away interesting projects but this is one that I might.

My first thoughts are you need a cost to cure. Then you probably have a stigma attached to the condo. Then you have no hard evidence to back up on the stigma deduction. But then no else can prove you wrong either. :)

Best advice. Charge triple your regular fee. :wink:
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
"Run like the wind"
 

Frank Bertrand

Junior Member
Joined
Aug 21, 2002
Professional Status
Certified General Appraiser
State
Pennsylvania
Did one like this where the home was stripped to the studs, the entire home hosed down with clorox.
The homeowner's insurance paid $44K to remediate back to studs. The reproduction back to previous living condition is another $50K.

The value without the mold was $65K

So, if they can take it back to the studs, you can start from there.
is there any insurance to remediate the mold? that will have to be taken into consideration too.
 

Tim The Enchanter

Elite Member
Joined
Jan 24, 2002
Professional Status
Certified Residential Appraiser
State
California
Play the competency card and ride off into the sunset, fast! 8O
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I would NOT touch that one with even Jeff, Mike, Frank, & Lee's combined E&O. :lol:

Seriously, unless you have the competence, and experience, as an environmental scientist expert, check your E&O coverage. Most will NOT cover you if you take on this assignment. The home owner's insurers aren't limiting mold coverage for nuttin.
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
One other thing. If you do decide to take this on you better get your hands on any enviromental reports that exist. Read them and understand them!
 

Charlotte Dixon

Senior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Delaware
Tom.....I wish you had posted here before going in there. But, even after doing the inspection, as mentioned above, I'd play the competency card and wouldn't even charge an inspection/trip charge.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
If they have done an environmental assessment, they should have a cost to remediate. Second, after remediation, you have the cost to restore. Third, you have the cost to sell. Therein lies a problem in that you probably will not be able to get homeowners insurance, so you cannot finance the home through normal sources. Therefore, the probable buyer would be someone who has a significant credit source (read "investor") who will buy the home and be able to hold it for 2-3 years until insurance can be obtained. Check your insurance regs through the state or local insurance companies. Take the fact that an investor will want a 15-20% ROI, with a 2-3 year holding period. Then look at what commercial property is returning and increase the risk factor. After all, you're not going to get market rent on this property (it's been contaminated), then discount the value after restoration over the holding period. So, the loss is the market value excluding any contamination less cost to remediate, cost to restore, and discount for holding period. You very well may come up with a negative figure.

Now, if this unit is contaminated, WHAT ABOUT THE REST OF THE CONDO PROJECT? I saw a brand new project required to be vacanted due to evidence of mold and it took over a year and $$$$ in remediation to the entire project.

Roger Strahan, SRA
 

John Hassler

Senior Member
Joined
Jul 23, 2002
Professional Status
Certified Residential Appraiser
State
California
Wow, interesting deal.

You should be OK provided you write up your scope of work correctly AND you have professional hazard and repair information (hopefully provided by the client - if the borrower has the info, get them to give to your client and then to you for liability reasons).

Determing loss is going to be difficult. I did a job in a five year old tract where all the sales were in the $1m to $1.2m range. Then I found a comp in the neighborhood of the largest model for $850k AND it's my most recent sale. Whoa, what's going on I'm thinking. Looks like all the rest in the neighborhood so how do I reconcile this difference since values are increasing. Start taking to agents and my borrower. Turns out it was foreclosed on due to major mold (construction defect) but completely repaired by the lender. Stigma of $250-300k. Let me know if you want this sales data for a matched pair analysis.

This is a job few will tackle and which has high liability - charge accordingly!


John Hassler
 
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