Why a Home Inspection is not Enough
When shopping for a new house, many prospective buyers are attracted to older homes that require TLC, or that have potential to be renovated into a more useable and valuable property. If secured for the right price, these older homes can have hidden value if renovated well.
During the buying process, due diligence is performed by arranging a home inspection, but did you know that most home inspectors are not qualified to assess the property for the presence of hazardous material, and frequently overlook these items?
While some inspectors may note the presence of vermiculite in the attic, without laboratory testing it is not possible to deem a material free from hazardous substances, and asbestos can be found in over 1,000 different materials.
Whether the property will be utilized personally or for revenue generation, having full knowledge of the holistic financial commitment is crucial to determining if the property is a good investment or a bad investment.
When you obtain a hazardous materials report, you will have full knowledge of all hazardous materials including mercury, lead, mold, PCBs, and of course, asbestos. While the presence of any hazardous material can increase the cost of future renovations and your environmental liability, the hazardous material that carries the largest financial burden is (you guessed it) asbestos.
While asbestos is safe if left undisturbed, any property with asbestos in it carries a financial liability equal to the abatement cost. You may not be planning to disturb the asbestos while owning the home, however the abatement costs will simply get deferred to the next buyer, and so on, until someone is left footing the bill.
Due to rising costs of labor and materials and more stringent abatement regulations, abatement costs are trending up over time, which leads to a snowball effect on the liability of hazardous materials. If an abatement of the asbestos in your home costs $30,000 today, it may be $35,000 in 5 years.
Before and after photos of abatement in a master bedroom and bathroom
Now that we understand the importance of obtaining a hazardous materials report prior to home inspection, how much does this cost?
Pre-purchase hazardous materials surveys (including the report) typically range in cost from $1,000 to $5,000 and vary depending on the size of the home, how many materials and layers may be present, and how quickly you need the results. If sufficient time is built into the closing period, you can wait for results 1 week from when the lab receives them. This is the most economical, and what we call “standard turnaround time”. While we can turn results around in as little as 24 hours, “rush turnaround time” carries a hefty premium charged by the lab we send the samples to, so it is best to avoid leaving the testing until the last minute. If, however, you have waited until the last minute, the premium to rush samples is miniscule compared to the cost of waiving your conditions and ending up with a large liability of hazardous materials that you had not planned for.
Buyers:
Prior to the purchase of any property dated pre-2000s, we highly recommend that the purchase agreement provisions for both a home inspection and a hazardous materials survey. We recommend at least a 2-week period to waive conditions in order to allow sufficient time to obtain material samples and receive the lab results.
If hazardous materials are not present, awesome!
If hazardous materials are present, we can help you by assembling an estimate for abatement, which may be helpful as a bargaining chip to secure a better price. If the seller does not budge on the price, you still win because now you have full knowledge on where hazardous materials are present inside the home you are purchasing.
Of special note: in some instances, the seller and buyer will share the cost of the survey 50/50, provided that if the deal falls though the seller is allowed to retain a copy of the report for their own records and for the next purchaser. It never hurts to ask!
Sellers:
Prior to the sale of any property dated pre-2000s, we highly recommend that you obtain a hazardous materials survey. Having a survey on hand will reduce the closing period timeline, and any potential buyers wary of the possible presence of hazardous materials will be put at ease.
If hazardous materials are present, we can help you by assembling an estimate for abatement. This may be helpful if provided to the buyers up front, so there are no surprises after the initial offer is accepted. Sometimes, sellers may have abatement performed and key areas renovated (kitchen and bathroom) to increase the value of their home prior to sale.
If no hazardous materials are present, you can provide this to any prospective buyer which will alleviate any concerns, proactively build trust with the buyers, and ultimately help you obtain the most value for your home.
Of special note: in some instances, if you wait until there is an offer you can extend an option to share the cost of the survey 50/50 with the buyers.
How to secure a quote:
Visit www.winmarkootenay.com or www.winmarnelson.com
Hover on “Services” at the top of your screen and click “Asbestos Abatement”.
Scroll down and fill out our quote request form and we will have a quote to you within 48 hours. We don’t have to view the property to provide a quote.