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MOLD/MILDEW in Basement....REO property

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liznindy

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
I am hoping someone out there has had this situation previously!

The REO property I am appraising has extensive mold and/or mildew throughout the basement...the walls are BLACK!

I am trying to determine the market reaction as well as the cost to cure.

I will go online to try to get some info, but thought perhaps an appraiser or two out there has some experience with this very issue.

If so, will appreciate any comments.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
#1: I hope you got out of there immediately!!!! Or at least wore a mask!

#2: Write up an explanation of what you saw and call for a professional inspection and determination of the exact type of mold that is present in this property plus an estimated cost to cure by a qualified contractor. State that your appraisal is subject to the mold inspection report and that it may impact the current value estimate. IF the existing mold is determined NOT to be dangerous, the estimated cost to cure would be approximately $xxxx. (Clean up with clorine and paint)

Of course, I'm looking forward to others ideas and comments. Especially by Don Clark.
 

George W Dodd

Senior Member
Joined
Jul 9, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I generally agree with Pamela, except that I wouldn't complete the appraisal until after the inspection and the estimated cost to correct has been done. Why?
Because the cost might be insignificant (bleach clean up)
Or: It could be so sever that demolision is the only option (rare)
But I wouldn't want an appraisal floating around out there without having more specific information and/or costs.
Just me.



"of all the things I've lost, I miss my mind the most"
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
In Texas, I have seen costs to cure mold exceeding $50,000. I had one that had mold in the master bedroom and master bath due to the hot water heater dumping the bottom out (it was in the garage closet that adjoined the master bath). I documented and backed away, then stopped the appraisal and called the client. I am not a mold expert and do not know the amount of required mediation or if mediation is required. Mediation may require complete removal of all carpeting, removal of the HVAC ducts, as well as a complete scrub down of all surfaces with people in environmental suits. When the attorney for the foreclosing lender called me for my value, I explained the situation. She agreed, saying she had seen losses exceeding $100,000 for mold, even in what appears to be small contaminations.

So, call for an inspection. If you can complete the report excluding the mold effect, go ahead. BUT put your warning about mold in 30 point type to protect yourself. Depending on the home, it may become a tear-down.
 

G-man

Member
Joined
Feb 4, 2002
Professional Status
Licensed Appraiser
State
Ohio
I completed a similar REO of a newer construction (1995ish?) home with about six inches of water in the basement and mold/mildew in the basement and parts of the first floor that were not closed off to the basement. I did a little asking around for information regarding mold/mildew and read enough about it to be seriously worried about not disclosing in big type about possible contamination hazzards. I did complete the report stating normal cost to cure with the exception of the mold/mildew part, as I am not anywhere near competant enough to assume that kind of liability. Haven't heard anything back from lender and property has not been listed and/or sold yet, so who knows what they did to the home. I should drive by it and see if it is still standing. :roll:
 

Kathy in FL

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Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Florida
I just did a REO like yours except the mold was in the master bedroom closet. I can't agree more about the DISCLOSE DISCLOSE DISCLOSE part. Take copious photos. Yes, of the mold. It's not real photogenic, but do your best.

Be sure to let 'em know you're not a mold expert...this could be plain old innocent mold...or it could be a killer. They need an expert. (Now let them try to find one.)

Kathy in FL
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Pamela,

A tip of the hat to you, and since you asked.....................I never say that a property has:

1. Lead based paint
2. Radon
3. Asbestos
4. PCB's
5. Mold

Or any other potentially harmful environmental hazard or contamination by same. What I do say is....."The possibility of contamination by lead contamination, lead based paint, radon, asbestos, PCB's, mold, or such things as under ground storage tanks, leaking underground storage tanks, and a whole host of other things............cannot be ruled out based on:"

1, What I observed
2. Subjects age(Think Title 10 USC requiring real estate professionals to disclose the possibility of lead and lead based paint in homes built prior to 1978(single family), 1980 other residential.
3. what I smelled
4. What I heard
5. Or what I tasted
6. What I discovered in public records or other documents in the NORMAL research conducted in preperation of the appraisal.

I just did a Ranch style house. It had an attached recreational building that was almost as large as the house(2,000+ SqFt). In the recreation building was a swimming pool that took up over half the buildings area. It has a blue vinyl lining instead of being ceramic lined. It looked as tho it had not been cleaned(the pool), or filled in a very long time. The blue vinyl was black with what appeared to be mold. The building has a brick exterior same as house. It opens directly into the living area by a large glass patio door. I did not linger in that area. After enumerating other repairs(this is a VA Appraisal), I said:

"The subject property was built prior to 1978. The possibility of lead contamination and lead based paint cannot be ruled out based on subject age. The possibility of asbestos and other contaminants cannot be rule out. The possibility of contamination by mold, a potentially toxic substance, cannot be ruled out based on the appraisers observations and in particular the area of the recreation building and pool area. However, the appraiser is not an expert in such matters. It is recommended that an inspection be performed by an invironmental inspection firm to ascertain any such contamination and possible remediation cost".

I did not say any of those things were true, just that I could not rule them out.

I take this caution although I have an extensive background in preventive medicine, nuclear, chemical and biological warfare traing and treatmen, and have been on the E-50 Ebnvironmental Committee of the ASTM(American Society of Testing and Materials), a 202 year old standards writing organization that writes standards of practice for every service and product in the world, and that wrote the standards of practice for a Phase I and a Phase II environmental site assessment. However, I am not a scientist, and do not do scientific testing which would be the only way to determine if any of my suspicions are true. I have also taught this stuff for years to Appraisers, Environmental Engineers and Scientist at all levels(Phase I and II Site assessments). I am presently re-writing my course to conform to the new Advisory opinion on the subject, effective 1-1-2003.

All I am saying is to be careful no matter what you suspect, and disclose everything your senses tell you or you discover in gathering data to do an appraisal. However, the moment you step outside an appraisers shoes and go looking for stuff, commentin on stuff, you put yourself out on a long limb of potential liability.

To that end I never:

1. Look for problems
2. Take samples of anything
3. Lift things up
4. Turn things over
5. Do an intrusive investigation of any type
6. Ask any additional questions I usually do not ask.

BTW, the house I mentioned is assessed at $174,000 and is being sold to the tenant for $150,000. I appraised for $170,000. "As Repaired". One could say there is over $20,000 loss in market value by stigma.

Don Clark, IFA
 
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