How Mold Can Affect Property Value
- Date: 08-2018
A home purchase can hit many snags, but few issues risk applying the kiss of death to a property deal more than a newly discovered mold infestation. Finding mold embedded in your foundation shouldn’t be the same as other worst-case scenarios for home sellers, like say, the floor caving in during a buyer walkthrough, but you would be surprised how both incidents have a similar negative effect on a property’s perception, and as a result, its value.
Mold is a non-starter for most buyers because of the short and long-term health problems it creates, but a mold problem that isn’t discovered—or disclosed—until late in a home transaction establishes a negative precedent for the buyer-seller relationship.
- For the seller, an uncovered mold infestation presents an uphill battle to restore buyer faith and enthusiasm, as well as potential legal liability if he or she failed to make the proper disclosures.
- For the buyer, not only does a mold issue dampen enthusiasm, but in some instances, leads him or her to question the buyer’s reasoning for the lack of disclosure. Even in the instance of a bona fide error, trust can be difficult to recoup, especially when the negotiations turn to:
oAdjusting listing price to better reflect the property’s current conditionoRevising contingency, inspection, and disclosure documentationoAssessing proper buyer compensation for mold remediation services
Mold Inspection and Prevention
The best way to protect your home from mold is to conduct regular property inspections, but it’s not enough to pay someone to walk through your residence for a few hours. First, you must make sure you’re hiring the right person. Many home inspectors are general practitioners, meaning they will look for a wide range of home defects, but does that include a mold inspection, specifically? Perhaps your inspector will focus more on radon concentration, foundational drainage, or the health of integral systems and appliances, like a water heater or plumbing grid.
Even before a professional inspection is necessary, though, you should be conducting your own yearly evaluations of dark, low-lying, or infrequently visited areas of your home, especially attics, basements, and crawlspaces. Remember, a mold problem indicates a possible water leakage or stagnating moisture deposits, so check home features that are susceptible to water intrusion, including windows, siding, and foundational walls. You should also pay special attention to:
- Recently or frequently repainted walls, which can conceal mold growth
- Carpeting that has been wet for 24-48 hours
Even when they are severe, mold infestations can often be mitigated by the homeowner without professional assistance. It’s important not to panic, or assume you’ll never sell your home. Most mold issues are correctable, and you’ll already be up against the wall of negative buyer perception, so the best strategy is to restore your space as quickly as possible—both to get your home back on the market and to stoke buyer enthusiasm if you’re already in the middle of negotiations.
It’s not enough to have an informal exchange with a buyer about a mold issue; there must be a documented account of the disclosure and its resolution. Not just for buyer and seller reference, but for future residents and municipal officials who may need to recall the property’s history down the line. One of the legal documents that serves this purpose is called a transfer disclosure.
Transfer disclosure is a newer legal requirement, and one that is not shared by all 50 states. Some states have long since adopted the disclosure statute, others haven’t, and some states are in the process of coming around. For example, in New York State, property owners recently became liable for failing to disclose a home’s environmental and structural concerns; but in the past, there was no incentive for them to be so transparent. New York State disclosure laws used to be governed by what was referred to as the caveat emptor doctrine, which translates to, “Let the buyer beware.” As such, it was the buyer’s full responsibility to inspect their target properties independently, either by hiring a third-party inspector or going through public records.
Now, buyer protection is a lot more prevalent. Most states, in some form or another, require transfer disclosure from the home seller, but the legal language varies. In states like Illinois, Kansas, and Oklahoma, a home seller is required to provide a buyer with a signed legal document detailing a property’s health and safety concerns. States like California also have this requirement, but no specific deadline for the seller to pass those documents along to the buyer, so long as it isn’t delayed beyond the signing of the purchase agreement.
Since transfer disclosure laws vary so drastically by state, best practice is to consult a local realtor or real estate attorney to confirm the statutes in your area to avoid legal liability and fees down the road.
Take Initiative and Preserve Property Value
A sudden mold discovery can seem like the end of the world for a home seller on the verge of finalizing a deal, and it’s hard to deny the obvious effect mold would have on property perception and value, but it’s important for sellers to understand they can still bounce back by taking swift steps to remediate the issue ASAP.
Regular housecleaning and water damage inspections will help you stay on top of the issue, but if mold still grows and you require professional assistance, remember to consult multiple professionals and request quotes from each, so you’re not cutting too much into your net profit once you do sell your home.