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Chris Schuetz, Real Estate Pro in Lexington, KY

How does water damage and mold affect the appraisal value of a home?

Asked by Chris Schuetz, Lexington, KY Tue Jun 24, 2008

I am interested in a home that has flood/mold damage. I have received estimates on repair costs, and believe that purchasing the house is still possible. Ideally, I would like to use cash to purchase the house and then take out a home equity line of credit (heloc) to fund the repair costs of arounf $150,000. The homes list price is 250,000, and other comparable homes in the area are selling for between 560,000 and 750,000. My problem is that I only have the cash to cover the intitial cost of the house and not the renovations. I am wondering how the flood/mold damage will affect the appraised value fo the home, and in turn my ability to extract the equity.

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Have you talked to a realtor in your area? They usually have a pretty good idea about appraisal values and that kind of thing. There are a few things that you need to consider when it comes to home appraisals. I'm sure water damage is a big factor.
0 votes Thank Flag Link Fri Mar 20, 2015
If you have water damage on the home, then it will definitely affect the appraisal price. It can be very bad to have water damage, especially if it is extensive. I would advise you to find a way to get the water damage restored, and then get it appraised. By doing this, you would almost certainly have a much higher appraised value.…
0 votes Thank Flag Link Wed Jan 28, 2015
If you are using a realtor, what are they advising? Do you have the history on the property. What caused the flood damage in the first place? Is the problem likely to reoccur? Is the property in a flood zone? If it is you may want to look long and hard on buying into a problem.
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0 votes Thank Flag Link Sat Jul 5, 2008
Can you get insurance on the home and if so at what cost?
The value might depend on the cause of the flood and if that has been fixed or not.
If it is subject to flooding again, then the value might not be worth much.
I think it also depends on the state of the mold and for example how long the home was flooded.
Was it a day or under water for a month? If it was a month then the whole house might need to be torn down to the foundation. Probably first quest is to the insurance company and see where you go from there.
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0 votes Thank Flag Link Tue Jun 24, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
You are quite right to be concerned. Is the water damage from a flood, if so there should be other homes in the area with similar damage to compare the difference in appraised value now or is your the first to sell. The mold it depends on the amount and kind, in Texas if it is larger than a 3X3 it must be on future disclosures.
The additional insurance that a purchaser has to purchase always affect the purchase price of a home, we just need to know more about this particular damage and house.
0 votes Thank Flag Link Tue Jun 24, 2008
You are correct to assume that the disrepair of the property will affect the appraisal. The ony way to know how much it will affect the value is having an appraisal done. However, if you have paid cash for a property, and their is no current lien on the home, then it stands to reason that there is a value to the propery that can be tapped in order to generate the funds needed for the repairs (however it certainly won't be the $560k-$750k value that it will be after repairs).

Your Realtor should be able to recommend some lenders that can assist you with the process, however if you require assistance or other recommendations, please feel free to ask. I am happy to assist you in any way.

Melissa Hailey
Coldwell Banker Jane Henry Realtors
0 votes Thank Flag Link Tue Jun 24, 2008
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