Association Information

If the home or neighborhood is governed by a home owners’ association (HOA) you should disclose that fact. You also need to know about the HOA’s financial health and provide this information to the buyer so that he or she can make an informed purchasing decision. Or if  the home is part of a historic association, buyers will need to know if the home is in a special historic district because it will affect their ability to make repairs and alterations, and it might also increase the cost of those activities.


Repairs and Lists of Items

Buyers need to know the home’s repair history so they can have their home inspector pay extra attention to problem areas and be aware of probable future issues. Texas law, for example, requires sellers to disclose previous structural or roof repairs; landfill, settling, soil movement or fault lines; and defects or malfunctions in walls, the roof, fences, the foundation, floors, sidewalks and any other current or previous problems affecting the home’s structural integrity. You may also need to disclose electrical or plumbing repairs and any other problems you would want to know about if you were going to buy the home and live in it.

Some states, like Texas and Michigan, will require sellers to disclose whether the property comes with a long list of items, including kitchen appliances, central air conditioning and heating, rain gutters, exhaust fans and water heaters.

Water Damage

When water gets in where it shouldn’t, it can damage personal possessions, undermine the home’s structure and even create a health hazard if it encourages mold growth. Mold is not always a bad thing though; it is usually an easy fix and will turn off other potential investors. Sellers should disclose past or present leaks or water damage. Michigan, for example, requires sellers to disclose evidence of water in a basement or crawl space, roof leaks, major damage from floods, the type of plumbing system (e.g., galvanized, copper, other) and any known plumbing problems. It can be difficult to know about water problems (and many other types of problems) if you’re flipping the home and only own it for a month or two.

Just always keep in mind that there are many risks for flippers or investors when closing on a rehabbed property. Some things might not have been obvious on your initial walk-through when you were filling out your Property Repair Estimate Sheet, particularly if it was in winter or during a dry spell. With both situations can be concealed. In situations such as these, check to see how much protection your state’s laws offer from disclosing information you would have had no way of knowing.

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The Mold

Once the house was won by our team at the auction we promptly went to inspect it. Once the mold in basement was discovered we knew we had a challenge ahead of us. While mold doesn’t mean the house is un-sellable in the least bit, it just takes a good know how on getting rid of it. In some cases, if the house is on the public market, mold can deter regular home buyers and leave a wider window of opportunity open for real estate investors. In the real estate investment world, mold can be the smell of money.

The Water

The second issue with The Mold House was water in basement. We quickly realized this was due to sump pump not running because power was turned off by the bank. This is somewhat common and is something investors should definitely be aware of with foreclosures. the positive to this is it can present good buying opportunity if the only repair needed is to provide power to the sump pump to remove the water.

The Norm

This house will also get our normal run through on a typical foreclosure. We will replace the carpet and flooring in the kitchen and bathrooms. The house will also get a fresh coat of paint though out.

Check back in a few weeks to see what our team at Part-Time REI does to overcome The Mold House issues.

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But not long ago news reports of mold-related illnesses and lawsuits against home builders scared the public into not even considering a house with any type of mold problem. With the housing market on the rise, rehabbers are finding mold is not as frightening as the media once made it. Many prospects in order to find an affordable home are looking at flipped houses. Mold is increasingly seen as a problem that can be solved rather than a hazard with new techniques and a better understanding of the dangers posed by mold. Heck, we didn’t even include it on our Houses Not to Buy list.

“For most people, a small amount of mold shouldn’t be considered a problem,” says Stephen Wilson, director of the Center for Indoor Air Research at Texas Tech University Health Sciences. However, since there are many different types of mold you need to make sure you know what you are dealing with. According to the Centers for Disease Control, small amounts of harmless mold appear naturally in all households, no matter how matter how often Mr. Clean visits.

Say a home inspection turns up evidence of Stachybotris chartarum, or stachy, a type of slimy, black mold that can cause allergic reactions in certain people. In many cases, small amounts of mold can be removed safely by the homeowner simply with a bucket of hot water and soap, while larger with larger outbreaks professional cleaning is a must. If the home is severely contaminated a complete gutting of a home may be required, which you will want to assess the cost of before deciding on flipping the house.  Keep in mind that the Centers for Disease Control recommends that it be removed no matter how much is found.

If the mold is left unchecked, it can trigger allergic reactions and asthma attacks for people sensitive to allergies, which is why it is mandatory to disclose mold on the house disclosure report. Typically, mold is discovered during the home inspection. If your building inspector can identify the moisture source, at that point it’s just like anything else that needs to be fixed before you can resell the house.

The real headaches occur when the source of the moisture isn’t obvious. If you cannot definitively decipher how the mold is getting there we would recommend passing on the home. It will just not be worth the headache. Last thing you want are your buyers to come back at your with a lawsuit.

There’s always going to be a market for the fixer-upper property, it may be mold, a bad furnace, structural problems or whatever. The problems that the buyers don’t want to deal with can mean potential on your end. Important thing is to b e able to asses with your Property Repair Estimate Sheet if the cost will be worth what you can get back on the deal.

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