Accountant · Orange, CA · Member since 2009 · 27 posts · 16 votes
I did a walk through of an REO today and it was in decent shape, but the broker said it probably wont be able to go to anyone but a cash buyer because of MOLD!
Any ideas on how much it costs to deal with the mold problem or is it a deal breaker and I should walk away?
To add to the other responses, mold really isn't that big of a deal (generally)...
You want to make sure to get it remediated correctly (i.e., make sure you get all of it and treat with a biocide/antimicrobial if necessary), and if it the mold was bad, it might be worth getting the house tested for mold after the remediation. But once you determine the source of the mold, it's not too difficult to remediate both the issue and the existing mold. Once that's done, you should be okay.
I look at mold just like I look at an old roof, cracked windows or dirty carpet -- it's going to require bringing in a knowledgeable contractor or two, paying some money, and getting the work done. As long as you're not doing the work yourself, there's really no difference between remediating mold and installing a toilet...
Btw, in some states you will be required to disclose the mold to future buyers, but if you had the work done by a reputable contractor, you should also have a warranty that will ease the buyer's minds...
Usually, it's not that expensive to fix. First you have to find out why the mold is happening and remedy that. After that, you are replacing dry wall and possibly studs to get rid of the existing mold.
Do you have pictures of the damage? Cash only properties are the right ones for investors to pursue because most buyers can't pay cash.
Where is it? If it's a good deal I'll take a look.
The BPO came in today at 345,000 and it comps out at about 360,000 so I didn't bother looking into it any further as it is not going to yield and rehabbing profits.
I didn't have my camera on me because it was a last minute decision to go see it so I don't have pictures.
Might be a good rental if you are looking for that. I don't know the rents in that area but I could find out if you like.
Is there a difference between mold and black mold?
Is there a difference between mold and black mold?
There is toxic mold and then regular mold and most of them are black. Mold removal is a pretty big scam so be careful. Costs for removal can run in the tens of thousands and that doesn't include reframing or new drywall. If you have it tested, make sure you use an independent lab that is not affiliated with any type of mold remediation company. Also make sure to tell the lab you will not be using anyone they refer for the same either. That is a conflict of interest.
Being a contractor, I've dealt with this on occasion before. I've had the same sample tested by four different people at once and got different answers from all four people. It's not an exact science.
To add to the other responses, mold really isn't that big of a deal (generally)...
You want to make sure to get it remediated correctly (i.e., make sure you get all of it and treat with a biocide/antimicrobial if necessary), and if it the mold was bad, it might be worth getting the house tested for mold after the remediation. But once you determine the source of the mold, it's not too difficult to remediate both the issue and the existing mold. Once that's done, you should be okay.
I look at mold just like I look at an old roof, cracked windows or dirty carpet -- it's going to require bringing in a knowledgeable contractor or two, paying some money, and getting the work done. As long as you're not doing the work yourself, there's really no difference between remediating mold and installing a toilet...
Btw, in some states you will be required to disclose the mold to future buyers, but if you had the work done by a reputable contractor, you should also have a warranty that will ease the buyer's minds...
The BPO came in today at 345,000 and it comps out at about 360,000 so I didn't bother looking into it any further as it is not going to yield and rehabbing profits.
Ya, you'd need to be in the $260's if there are next to no repairs required, so it seems far away from a deal.
We are a new member in Michigan. We kill mold in properties using ozone. Our work is guaranteed. It kills the mold on the surfaces and the spores and microtoxins in the air. We have saved investers hundreds to thousands of dollars. Look for a company that uses ozone in your location.
We are a new member in Michigan. We kill mold in properties using ozone. Our work is guaranteed. It kills the mold on the surfaces and the spores and microtoxins in the air. We have saved investers hundreds to thousands of dollars. Look for a company that uses ozone in your location.
Denise, I'm curious to find out how ozone works. Does it not require you to go into the drywall ? How does it save money over other form of mold removal?
I'd like to hear more about that, too. Is there an EPA certified process or some such? How does the ozone get into the cavities in the walls? For that matter, how does it get to the mold that's inside the drywall? Even if ozone does kill mold spores and growth, how can it kill want it can't get at?
In regards to your questions concerning ozone. Just to be clear I own a service in Michigan that kills mold and odors from properties by appying a shock treatment of ozone. Ozone is FDA opproved, EPA registered, Certified Organic, and the generators we use are UL approved. We use UV light generators that take the oxygen from the air, splits the atom and fills the property with a ozone cloud. Anywhere the air goes the ozone goes. The ozone will not penetrate the drywall, however, if you have mold between the drywall you have oxygen getting in the wall through crackes. The ozone will find the cracks and seep into the wall, killing the mold.
The ozone kills the mold, however it does not clean, the mold is turned into a powder that can be washed off the wall or vacuumed. The spores and the microtoxins are dead also. You still may have to replace the drywall if the mold has damaged the materials.
During the treatment the property must be vacate of people and animals, because the levels of ozone generated are unsafe. However, ozone turns back to oxygen in about 15 minutes. We treat the property for 24 hours to kill mold.
We save investors money because we do not remediate. The lastest attic we treated, the investor got quotes for $8000.00 to remediate, we charged $500.00.
Mold is the new asbestos. Everyone has a fear of something in housing...this go around it happens to be mold. Maybe next time it will be radon gas.
Ditto, Mark. Mold is gold. I’ve bought properties that were so wet you could put your finger through the basement drywall. A few thousand dollars to seal a foundation, a fungicide like bleach, new insulation and drywall, and you’re back in business.
Half the investors I know won’t touch a leaky foundation. The other half won’t touch mold. Find a property with both, which is often how the mold got down there in the first place, and the purchase price drops considerably. There’s a lot of hype you can take advantage of.
I realize this an older thread, but just wanted to jump in with a question in hopes that someone will weigh in.
Does anyone have experience with a cash offer Fannie Mae situation where mold was discovered during the inspection process? With FM, placing a repair dollar amount on the offer as a contingency doesn't work...I have been told that I just have to decide within 10 days whether or not I will move forward to closing. My question is if Fannie might accept a lower offer based on the increased cost to abate the mold and potentially repair any damage to the joists? Anyone have personal experience in this area?
My question is if Fannie might accept a lower offer based on the increased cost to abate the mold and potentially repair any damage to the joists? Anyone have personal experience in this area?
Personally, I hate working with Fannie Mae, but with respect to this particular situation, they are generally pretty reasonable. As long as you come back within the due diligence period with a quote from a qualified mold remediation company, and as long as there wasn't a lot of competition for the property, in my experience, FNMA will often be willing to negotiate a lower price.
That said, make sure you do it within the due diligence period. FNMA REO addendums are notoriously seller-favored, and once the due diligence period is past, you are pretty much stuck buying the property and they won't negotiate with you.
we just finihed up a project in long beach, Ca it was about 1300 sq ft. It had alot of mold from leaky pipes , we removed all the drywall in the entire house for about 600 bucks all new drywall installed with texture for 3,100. So it wasnt that bad , We had to re-wire the house anyway so my electrician lowered his price for me as well, worked out fine
As long as you come back within the due diligence period with a quote from a qualified mold remediation company, and as long as there wasn't a lot of competition for the property, in my experience, FNMA will often be willing to negotiate a lower price.
There was no activity at all on this property which had been on the market for over 180 days. We have been through a couple of counter offer cycles but we have now been told that another realtor's clients had an interest in it also. We have another 5 days in our 10 day inspection/decision period. The estimate I have is for $3000 to rip out all the old crawlspace insulation, take care of the mold, replace the insulation and add a vapor barrier and two fans to increase the circulation. It's not a huge deal, but I kind of would like to go back and try to get some money off. I just don't know whether that is even an option.
Travis - Thanks for your response. So far, we have not identified mold in the house...it is believed to be in the crawlspace, mainly around the existing ductwork (old and uninsulated) that will be ripped out during the project. It seems like it's not that big of a deal...but I'm just trying to see if I can save a dollar!
We are a new member in Michigan. We kill mold in properties using ozone. Our work is guaranteed. It kills the mold on the surfaces and the spores and microtoxins in the air. We have saved investers hundreds to thousands of dollars. Look for a company that uses ozone in your location.
It kills it but it doesn't remove it. Dead mold is still an allergenic.
Mold is not as big of an issue as some make it to be but it can be tricky to address it correctly.
First, remediation quotes can vary wildly, for the same job I got quotes from $2k down to $900. Some guys want to do the whole oxygen tank, bio-suit deal when it really is not necessary.
In some cases all you need to do is remove the moldy drywall, double wrap it in 6mil plastic and dump it while wearing a one dollar n-100 mask from home depot. Depending on how much it has spread then you might need to do an actual remediation. Probably the worst case is when it has gotten in the AC ducts because that makes it spread all over and cleaning the ducts is a pain.
The only true way to know is by doing testing. If you do you have to do it before remediation and after. A mold test should run about $150-300 per test, it's a simple thing just need the right equipment.
There is also a difference when there is mold on a porous surface vs. non-porous. When it's non-porous you can clean it and kill it with bleach. When it's porous like drywall or wood you have to remove it. In the case of wood you would have to sand it and then apply biocide.
The most important thing with mold is finding the source of water. In my case it was due to some wet studs that had not dried up from when they got wet due to a water heater leak. Once we peeled back the drywall, dried the studs and sanded them the mold never came back.
Black mold is the "scary mold" but mold comes in all colors. Strachybotus (sp?) is the toxic one and it can be different colors. However many types of mold can be toxic if you are allergic to them.
Finally, I used the $10 mold test from Home Depot to get a $5,000 rebate on a house from the bank. Banks never acknowledge the presence of mold until you prove it to them (pictures and test result). :wink:
Finally, I used the $10 mold test from Home Depot to get a $5,000 rebate on a house from the bank. Banks never acknowledge the presence of mold until you prove it to them (pictures and test result). :wink:
That is exactly what I would love to do. Since it's a Fannie Mae property and they aren't too excited about the fact that they aren't making any money off the house, the bank nor listing agent have been very excited through this process. I get the point that they would rather not sell it at all, so I don't know how willing they will be to knock money off the house.
At this point, we have accepted their second counter offer and completed the inspection. Is it considered another counter offer (which would open the house up to other buyers) if we go back and say "we found mold that has to be remediated, so you need to take $3000 off the price of the house"?
Any advice from you experienced folks and or RE folks would be much appreciated.
Is it considered another counter offer (which would open the house up to other buyers) if we go back and say "we found mold that has to be remediated, so you need to take $3000 off the price of the house"?
No, that is not a counter-offer. The contract is in-place and at this point, while you can keep negotiating all your like, unless/until there is an agreement to change the contract -- or unless you execute on one of your contingencies -- the contract will stand as-is.
Now, you can certainly ask the bank to reduce the price, and if they don't, it's up to you whether you want to go forward with the current contract or whether you want to back out using your due diligence contingency.
Just keep in mind that if you don't back out before the end of the due diligence period, you're stuck with the current contract.