I recently completed an appraisal for a purchase transaction. As soon as I stepped into the garage, I could smell it. That telltale odor of mold. It's a musty, stale smell and pretty unmistakable. 

For an Appraiser, this is an immediate red flag. "Mold" is definitely a four letter word in an appraisal. The photo below is an example where Black Mold was growing in a garage as a result of a roof leak.

The FNMA Selling Guide states for appraisals: "When an appraisal is required and there are incomplete items, physical deficiencies, or items affecting the safety, soundness, or structural integrity of the improvements, the appraisal must be "subject to" completion of the specific repairs or alterations."

FHA also has a stake in this. They require a home to be safe, sound and to provide healthful living conditions before lending.

What are Molds?

Molds are tiny microscopic organisms that digest organic matter and reproduce by releasing spores. Molds are a type of fungi and there are over 100,000 species. In nature, mold helps decompose or break-down leaves, wood and other plant debris. Molds become a problem when they go where they are not wanted and digest materials such as our homes.

Mold loves moisture, warmth, oxygen, food, and darkness. By the time you can see mold, you probably have a severe problem. The most common types of bathroom mold have a grey, black or dark brown appearance and a down-like or wooly texture. 

Why is it an issue?

Lenders are concerned about mold because it can indicate structural deterioration and future financial obligations, which can impact a property's appraisal and loan terms. Lenders may require a thorough mold inspection and remediation before approving a mortgage, and in severe cases, they may reject the application altogether.

Black mold can be dangerous because its mycotoxins can be breathed in, ingested, or absorbed through the skin or eyes. These mycotoxins can enter the person's blood, which can lead to many health problems.

What does the Appraiser do?

As Appraisers, we are required to observe and report. We don't diagnose things like this, so we will call in an expert. many times, the appraisal will be made "Subject to inspection by a qualified professional to diagnose and remediate. Remediating black mold involves more than just cleaning the visible mold. It requires professional assessment and intervention to remove all affected materials, treat the area with specialized fungicides, repair any physical damage and ensure the home is completely dry and free from potential mold sources.

In the example photo at the top, the mold was a result of a roof leak that had been left, likely for a few years. The Appraisal was made subject to inspection and remediation by a qualified professional. The roof was already being replaced as part of the contract when I got there. The inspection and repairs took less than a week and the property closed on time. The resulting repair is below.

What should a Realtor do?

If you run across black mold, get it taken care of BEFORE the Appraiser inspects the property. Re-inspections cost time and money. Black mold in a bath, that is not severe, can usually be handled by a 1/4 cup bleach to a gallon of water solution. Always wear gloves, eve protection an OSHA approved particle mask.

For everyone in a real estate transaction, understanding and addressing the risks associated with black mold is crucial. Regular maintenance can prevent mold growth and protect health, property value, and stay in compliance with lender requirements. As an Appraiser, I cannot overstate the importance of dealing with mold issues promptly and professionally, ensuring your home remains a safe and valuable asset.

If you have gotten this far, I'm glad you made it. Please leave me a comment below.

Anthony Blackburn is a Certified Real Estate Appraiser at San Juan County Appraisal, serving the San Juan Islands and surrounding mainland counties.

I do Estate appraisals, "date of death" appraisals, tax appeal appraisals, private lending appraisals, divorce appraisals and more.

I am always available for any real estate appraisal related questions, whether it's my deal or not. I'm always happy to have a conversation. (360) 627-0208 or ablackburn@sjcappraisal.com

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