Hard to Believe Chinese Drywall Could Help You with a Short Sale!

This is a true and funny story and the names have been changed to protect the innocent (and not so innocent!)

First if you do not live in Florida you may not have HEARD of Chinese Drywall. During the go-go years of 2004-2006 with the building boom on, US manufacturer's couldn't keep up with demand for drywall for new construction. So we began importing it from China. Now a lot of homes built with the product are having "mysterious" problems with wiring and plumbing corroding behind the walls and air handlers turning black and dying. The culprit SEEMS to be a sulphur gas being outgassed by the drywall. OK that being said - today the Sarasota Herald Tribune had another front page article about the problem and how the various builders affected are handling the situation (or in some cases NOT handling it!) Here's a link to that article:

www.heraldtribune.com/article/20090423/ARTICLE/904231089/2055/NEWS

OK so that puts this in context for you. Now as anyone who reads this knows, we do a fair amount of short sales, and not surprisingly one of them is in one of the communities where one of the builders in the article above built homes. I have been being frustrated with one of the lenders on the home who has been stalling hoping that they would get MORE money out of the short sale. Today I am speaking with their loss negotiator and asked where does she live. She was in a northern state. I asked have you HEARD of Chinese Drywall? Well she had not - so I mailed her the following note with a copy of the article:

"Attached is an article from today’s Sarasota Herald Tribune concerning what is happening here regarding Chinese Drywall. Note that the article specifically mentions XYZ Builders as one of the builders with problem. The subject property was built by XYZ Builders and is in XYZ Builders (name of community) and XYZ has acknowledged this IS one of the affected communities. The value on this property could drop like a stone if we lose this buyer."

And Hey PRESTO - she called back and told me - she is reccommending the bank ACCEPT the current Short Sale and I should have my acceptance letter shortly!!

I may have to incorporate this into my strategy for ALL short sales built after 2003!  Guess they really don't WANT to own THOSE houses!

- Mike W.

A New Reason for Caveat Emptor in Getting That Bargain on your Dream House?

Below is a link to a recent article from the Sarasota Herald Tribune about a relatively new "threat" that is turning up in some newer Florida homes. Chinese Drywall. During the boom years for builders demand for drywall to build new homes far outstripped available US manufactured supply and a number of builders or their subs ended up sourcing drywall made in China. Now it seems to be outgassing something that may be causing pipes and wiring behind the walls to discolor and corrode. Yet the builders say it does not pose any threat to human inhabitants.  I am not a scientist but my own perspective is, if it will corrode copper pipe, I'd just as soon not inhale it!

OK to WHY do I now wrap this around Foreclosures and Short Sales. Well in both Short Sales and Foreclosures you almost always HAVE to buy the home "As-Is" with a right to inspect. If you're buying a resale house right now built in say 2005 to even today (the Tribune article says the product is still sitting on shelves in the US and may be being sold or installed) then you MAY want to try to ascertain if this was used. But in the case of at least Foreclosures, because the bank never "lived" in the house, you always have to buy the house without receiving ANY Seller's Property Disclosure. And even in the short sales, where you're likely to get a disclosure, the  lender, if they approve the sale, will make ALL parties sign what I euphemistically call the "Hold Harmless from Hell" where they make everyone state and restate that the seller is NOT going to be responsible for ANYTHING post the inspection - that you as a buyer release them etc etc etc.

If you're buying a resale home built prior to 2005 it's probably not an issue but if you find yourself looking at a home that is a "distress" buy and it is in that date range, perhaps a call to the builder to ask what THEY know about this issue from their other homes or their subs might be warranted.

In any event, let this be another reason why you never ever purchase ANY home without getting inspections from a reputable inspector  - let the Buyer beware!

http://www.heraldtribune.com/article/20090201/ARTICLE/902010371

- Mike W.