We were supposed to close on The Sunglasses House last week, but due to some title issues that haven’t yet been resolved, we still don’t have a closing date. In fact, we don’t know if it will be another week or another two months…
Normally, I wouldn’t be over-anxious about closing on a property, but due to the poor condition of this house, we’re starting to see a major mold problem. The laundry room has had mold issues since the day we first saw it, but apparently a breach in the garage allowed water to enter (there’s still a big puddle in the center of the garage), and now all the rooms surrounding the garage (including the crawl space) are starting to show signs of mold.
I’ve never been a fan of houses with mold, and we’ve even rescinded a couple offers in the past when houses we had under contract began having mold issues. But, I decided on this one that I’d bring in a mold remediator to give us his opinion of the situation, and take it from there.
The mold guy came by the property earlier in the week to meet with our project manager, assess the severity of the problem and then lay out our options. Turns out the mold is a bit more widespread than we thought — it’s migrated upstairs to the kitchen and into the HVAC ducts. That said, he didn’t consider this to be too severe of an issue, and indicated that he could completely eliminate all the mold in about a day.
While he didn’t think it would be a big deal to remediate the mold, the cost would be about $2500 to perform all the mold-remediation tasks, including demo and disposal of all moldy surfaces, treatment of the studs behind any damaged sheetrock, and then fogging the entire house with a chemical treatment.
Once they were done, they recommended bringing in a certified mold inspector, who could test for any remaining issues, and then provide a 5-year warranty on the remediation work. This, combined with the replacement of the removed drywall, the cleaning of the HVAC ducts with an anti-microbial, and the few other tasks necessary to get the house mold-free and then restored to it’s current condition would cost a total of another $1500 or so.
In other words, we’re now looking at an extra $4000 that wasn’t originally budgeted for (or needed); and the longer the title issues and the purchase closing drag out, the more expensive this is likely to get.
We’ve asked the bank to lower the price of the property by an equal amount of the remediation, or to bring in their own contractors to remediate, but that they’ve refused. If I thought we could close by the upcoming (already extended) close date next week, we’d probably just eat the cost ourselves. But, given that we don’t know when we’ll be able to close or how much more expensive this will get in the meantime, we may have to back out of this deal.
After backing out of The Unlucky House this week, I hate to do it again. Of course, had the bank been able to close by the date laid out in the contract — or if they were willing to work with us to remediate the worsening mold problem — this would not have been as much of an issue.
We’re going to see if the bank has a change of heart in the next couple days (or if they can get the closing to happen quickly)…if either of these things happen, we’ll hopefully proceed with this deal. If not, we may be skipping this project…
If you have to back out, are you going to lose your earnest money deposit? If so, hopefully you didn’t put up too much. Losing the sunglasses is bad enough. LOL.
Kwerner, typically if the bank cannot preform. AKA provide clear title and sell the house by the agreed upon closing date. The buyer can request their money back.
If additional mold was the only issue, I would say there is high possibility the earnest money would be toast in an “AS-IS” contract. On the other hand, if the bank, or selling agent knew about the mold and did not disclose it, there is definitely a liability issue on the seller’s part.
In the bank addendum they kill all possible liability…
Too many bummer post in a row 🙂 We need some good news! I’m sure your due for some.
I had a small mold issue on 2 bathroom walls a few flips ago…. I ended up just cutting the drywall out and throwing it in my dumpster, and then I treated the studs with pure bleach in a spray bottle. I treated it about 3 times, letting it dry each time, until the mold was completely gone… Then we drywalled it back up, and textured & painted, and never saw mold again in that house 🙂
Sounds like you are dealing with a severe problem though if it’s in several rooms. You’ll have to remove and re-drywall almost the whole house it sounds like?
To address a bunch of the comments…
As Steve mentioned, if the bank can’t close by the agreed upon date, I can back out with no penalty (i.e., I get my EM back).
Additionally, if the house is in substantially different condition than it was when I put it under contract, I can also get my EM back and back out of the contract. Whether the mold constitutes “substantially different” can be debated, but more REO sellers wouldn’t put up too much of a fight.
All that said, the bank says they can close in the next couple days, and even though we’re past the contract date, we’ll likely close on it and take care of the extra expense out of our own pocket.
I’ll have more details next week…
The words “bank” and “heart” in the same sentence…funny.
What I learned from my mold experience was that mold will spread in a conducive environment but there is probably only one source. In my case it was some studs that got wet during a water heater leak and never quite got dry. But if you looked at the entire basement there was mold showing up where the wet studs where and also in adjacent rooms that had never gotten wet.
However, we did not discover the wet studs until we removed the drywall. Once we removed the drywall and got the studs cleaned and dried the mold in the other areas was just in the surface and I was able to clean it by just wiping it down with bleach solution. It never came back.
Careful with what the mold remediator says…one of the quotes I got told me to re-paint the entire basement with oil based paint, instead of water based, after the treatment. I later found out that oil based paint actually has more organic components than water based paint. After cleaning the moldy surfaces wiping it down with a solution of borate and water will inhibit future mold growth…and it costs about three bucks.
Just wondering…
We’re looking at a Fannie Mae REO that has extensive mold in the basement. Do you think they’d be better or worse than your bank about lowering the cost of the house the amount paid out for remediation?
Angie –
If the mold was there when you put in the offer, I would recommend that you just factor the cost into your offer price. Generally speaking, banks don’t like to lower their agreed upon price, except in extreme situations.
Of course, if the mold is new, and happened between the time you put the house under contract and the time you closed, you can generally make a good argument for having the bank lower their price a reasonable amount.