As defined by dictionary.com, a stigma is a mark of disgrace, shame or discredit associated with a particular circumstance, quality or person.
I received a call one afternoon from a seller asking me to list his property – a remediated grow-op – for sale. He was previously listed with another agent for 179 days on the Multiple Listing Service and the listing had just expired. On the MLS®, in the Real Estate Agent remarks (not visible to the general public), it stated “please ask about the PDS– - property disclosure statement” – a clue to a potential issue and an invitation to inquire further. In BC, full disclosure of a former grow-op is mandatory.
The four-bedroom, four-bathroom, 3,954-square-foot home was priced $78,000 below assessed value when he originally purchased it. The Real Estate Agent remarks at the time of purchase stated: “December 2007 grow-op discovered. Repairs done by April 2008.” Completely aware of the stigma and negative public perception, he decided to proceed with an offer. He requested and received the remediation documents, hired the appropriate experts, had the home fully inspected and purchased it on July 28, 2009. He lived in the home for over five years with his wife and two children without any problems or concerns arising. He was now selling and relocating.
I listed the property on September 13, 2014, for $559,800 ($63,000 under assessed value) and sold it with two offers on the table for $555,000 on November 5 2014. Comparable homes in the area were selling for over $600,000.
For the purpose of this article I approached Laurissa Rasmus of RE/Max– the Real Estate Agent who represented the buyers–for insight into her clients’ decision to move their family into this “stigmatized” home.
She told me, “My buyers were confident in their purchase since the home was fully remediated and the seller and the seller’s agent were able to provide the necessary documents to support the remediation. After the property passed its inspection by a certified home inspector, they felt reassured. The sellers had lived in the home for over five years without issue and my buyers were happy to pay well below assessed and market value for a nice home in a great neighborhood. We had a discussion about the stigma associated with grow-ops and they were not worried since they planned to live there for many years.”
Laurissa’s buyers were able to obtain financing to purchase my listing in less than 48 hours.
However, Sarah Bess Miller of Dominion Lending Centers cautions that this is not necessarily the norm. “Approving financing for a former grow op can be challenging as a large number of lenders will not even look at this type of file,” she says. “Most people believe that a minimum of 20 per cent down payment is required and although this may make the qualification process easier, it is not necessary in every case. There are some credit unions that will still look at remediated grow ops with five to 20 per cent down. Coast Capital is one of those local lenders and they are still being approved by CMHC at this point. Remediation documents are always required.”
Before February 2006 there were no laws in place regulating the remediation of former grow-ops. Municipal bylaws now dictate the guidelines for remediation. In the City of Surrey, the Controlled Substance Property Bylaw No. 15820 outlines what is required to remediate and reoccupy the property and it is a detailed process.
After the discovery of a grow operation, the city may disconnect the supply of electricity, water and natural gas if there is an immediate safety concern and will issue a DO NOT OCCUPY notice.
Remediation work must be assessed and completed by an approved company on the city’s Approved Remediation Professional’s List. These companies check for and remediate issues such as mold, contamination from pesticides/chemicals, and problems with air quality. In addition, a licensed electrical contractor must diagnosis any electrical issues and perform the required repairs.
Only after all the work is completed can a certification form be submitted and the no-occupancy notice removed.
Despite all this, we are increasingly seeing remediated grow-ops not just selling but selling with multiple offers. My experience does not stand alone. Dave Jarvis of Royal Lepage listed a remediated grow-op this month with similar results. “Within the first two days we had five showings, two offers and another party wanting to write a back-up offer,” he says.
With remediation guidelines in place and a multitude of experts available to do specific testing and inspections, are buyers becoming more comfortable considering a former grow-op as their future family home? With due diligence, increased education and available resources there has been a shift. The biggest hurdle may just be the stigma associated with former grow-ops although I do believe the scarlet letter on such homes has begun to fade.