Avoiding health risks is a great reason to tackle your mold problem head on. After all, the side effects of living in a mold-infested home can be very bad indeed.
But as it turns out, there’s another reason to take mold seriously. Namely, your property’s resale value. The Wall Street Journal has called mold “the current bane of real estate transactions,” noting how even past infestations can affect the resale value of a property—to say nothing of mold that is still active.
So—just how far down can mold drive the value of your property?
Two experts in property values, Marion Johnson and Paul Welcome, conducted a detailed case study of a mold-infested luxury home in 2001. They found that the property’s overall value had depreciated 53% as a result of large scale mold infestations. This is an extreme case. Other studies suggest that serious mold infestations can cause devaluations of 17 to 23 percent, on average, in residential properties.
Naturally, when mold was discovered in the luxury home mentioned above, the professionals were called in. Mold remediation measures were taken. The problem was dealt with. Did this allow the property’s resale value to recover?
Unfortunately, no. The case study concludes by saying that even after the mold had been remediated, the value of that luxury home remained significantly lower, through several owners, as a result of the previous mold problem. The implication here is that large scale infestations, when they are allowed to get past a certain point, may cause permanent damage to property values, even if the problem is professionally eradicated.
It’s difficult to put an exact value on how mold depreciates property values. What’s certain is that even moderate infestations can cause significant depreciation. An existing mold problem will certainly drive the resale price down as potential buyers think about gutting walls, replacing floors and ducts, and paying for other necessary renovations to address the mold problem. If the seller takes care of these things ahead of time, the resale value goes up, but not as high as it was before the infestation. Meanwhile, heavy remediation costs have already affected the seller’s bottom line.
Is it possible to put the house on the market without saying anything about current or past mold problems? Not a good idea. Failing to disclose mold problems can result in lawsuits on the part of the buyers, so it’s best to be honest and disclose any large scale mold remediation projects that have taken place. Doing this will almost certainly affect the resale value, as buyers anticipate the possibility of a recurring mold problem, but at least it will mitigate the possibility of lawsuits. Insurance companies may also shy away from the property, or insist on higher rates of coverage, which also affects the resale value.
Is it all bad news, you might ask? Definitely not!
Seeking mold remediation now, before they have a chance to become truly large scale problems, can save your property values from plummeting in the future. Understanding the conditions in which mold grows, and how to mitigate those conditions in your home or business, can make a big difference in the end. Stopping mold in its tracks is a result of taking action now.
Has this post improved your perspective on how mold affects property values? We certainly hope so! If you have questions or comments, we welcome them in the space below.