As an appraiser, you don’t need to know everything a home inspector would, but to effectively complete valuations, you do need to know more about environmental hazards than a layperson. We want to provide more information about five examples of environmental hazards to look out for when inspecting a residential dwelling, so you can better inform your clients and also protect yourself while completing valuations.
Environmental hazard #1: Mold
Dampness and mold go hand in hand. If a house has a moisture problem, such as a roof leak, plumbing leak, or a damp basement, it is a safe bet that there mold is growing somewhere. Mold is a fungus; there are thousands of different species of molds. Of those, only a few hundred species are common in residential structures, and only a handful of those are harmful or allergenic to humans.
As an appraiser, you are not an expert in mold identification, nor are you expected to be However, in addition to dampness issues, there are other signs that indicate mold may be present, such as a musty odor or visible signs of black, green, or white discoloration. Even if you feel confident that you are seeing what you believe to be mold, you cannot tell a toxic mold from a harmless one based on its color. Only a professional tester can determine whether mold is on the property and what type it is.
Your responsibility as an appraiser is to document and photograph any evidence of any mold-like substances and note them in your report. Since you are not an expert in the identification of mold, we recommend using the term “mold-like substance” in your appraisal reports. For example, “Appraiser has identified a mold-like substance on the front foundation wall.” This lets the intended users know that you have noted this substance but do not know whether it is actually mold.
Depending upon the intended use of the appraisal, the client may want to have testing done. You might base the appraisal on the extraordinary assumption that the substance is not toxic or allergenic mold.
Remember that as an appraiser, you are not expected to identify these examples of environmental hazards and are not required to look behind walls or remove insulation or carpet to find mold.
Environmental hazard #2: Contaminated drywall
Homes built in the U.S. between 2001 and 2009 are at risk for having sulfide-contaminated drywall, sometimes called “Chinese drywall,” due to its origin. Due to shortages of U.S.-manufactured drywall at the time, some builders turned to imported drywall from China to fill their requirements, and it began causing problems for homeowners almost immediately.
Under certain conditions, the sulfides within this contaminated drywall can let off sulfur gasses. In addition to having a strong odor, these gasses can cause health problems for building occupants and corrode copper and metal surfaces, including appliances, wiring, and air conditioners.
Homeowners in 44 states have complained to the Consumer Product Safety Commission about contaminated drywall. Most of these complaints are from Florida, Louisiana, and other southeastern states. This is partially due to a higher concentration of these homes being built in the wake of Hurricane Katrina, but also, the higher humidity levels in these areas increase the contaminated drywall’s off-gassing. Homeowners in areas with lower humidity levels or in homes with better ventilation might not discover there is an issue for years.
As an appraiser, it is not your responsibility to identify sulfide-contaminated drywall. If you notice a strong sulfur smell within a property, make a note in your report, as that could be an indication that the property has contaminated drywall.
Environmental hazard #3: Asbestos
In the late 1800s and early 1900s, builders often used materials made with asbestos in home construction. It was a common building material, found in everything from insulation to floor tiles to rigid shingle-type exterior siding.
The negative health effects of asbestos have been known since the late 1800s, but the long time between exposure and the onset of symptoms led to a delayed governmental response to the issue. In 1920s, scientists conclusively proved that exposure to asbestos fibers can cause lung cancer, ovarian cancer, laryngeal cancer, mesothelioma, and a condition known as asbestosis, which scars the linings of the lungs. Despite this proof, governments were slow to implement laws restricting asbestos-containing materials (ACMs). In fact, it took until March 18, 2024, for the U.S. to ban the use of all asbestos products¹.
As with other examples of environmental hazards, you are not responsible for testing and identifying asbestos, and you shouldn’t try to. Many products look the same whether they contain asbestos or not. Floor tile and shingle siding with asbestos look the same as tiles and siding made with fiberglass or other materials. Without testing, you can’t tell them apart.
If you come across a material you suspect may contain asbestos, leave it alone. Note its existence, take photographs of it, and contact the client. If the asbestos material is intact and in good condition, it might not need removing. However, cracked, frayed, or damaged material can cause asbestos fibers to release into the air, where they can be inhaled and cause significant health problems.
Environmental hazard #4: Lead paint
Lead has been used as a pigment in paint since the 4th century BCE. It can also improve the paint’s durability and appearance, accelerate drying times, and aid in resisting moisture. Lead paint was known to be an environmental hazard and safety concern for decades – even Benjamin Franklin cautioned his friends against using it in their homes. But because of the perceived benefits, lead paint was widely used in U.S. homes until it was finally banned in 1978.
Any house built before 1978 is likely to contain lead-based paint. While it’s not harmful if it is in good condition, when it is peeling, chipping, cracking, or otherwise damaged, occupants of the house are exposed to the toxins and at a higher risk of health and developmental problems, including nervous system damage and kidney damage. Children are particularly susceptible to lead poisoning by chewing on lead-based paint chips or putting toys covered with lead dust in their mouths. Teething children may be exposed if they chew on protruding home features, like windowsills. Infants may inhale lead dust while crawling or consume it from their hands afterward. This type of lead exposure in children can delay cognitive development and stunt growth.
Any damaged paint should be tested to make a definitive determination if it contains lead. Your responsibility as an appraiser is to note any defective paint you find in your report, document it with pictures, and notify your client. The FHA states that if the house was built prior to 1978, any defective paint surfaces are assumed to be lead-based and must be scraped and painted in compliance with EPA requirements.
Environmental hazard #5: Lead water pipes
The well-publicized water quality issues in Flint, Michigan, from 2014 to 2019 brought the issue of lead in drinking water to the forefront of public consciousness. But Flint is far from the only town in the U.S. with lead in its drinking water. According to the EPA, there are an estimated 9.2 million lead service lines providing water to homes and communities across the country². Analysis of EPA data shows that between 2018-2020, 56 percent of Americans drank from pipe systems that provided lead-contaminated water.
The U.S. banned the use of new lead pipes in the 1980s, but many water systems are still reliant on lead pipes that have not been replaced. Many of the lead pipes that are still in use today are supply lines that run from the main water line in the street into the house. These lines are underground, and you are not responsible for identifying them in your report.
Most lead piping inside houses has been replaced, but it may be found in older homes. Like the other examples of environmental hazards, lead pipes can sometimes be difficult to distinguish from galvanized steel pipes, as they are both gray or metallic in color, and they are similar in diameter. You can tell them apart by using a magnet. A magnet will stick to galvanized steel but will not stick to lead. Are we advocating you start carrying magnets and checking for lead pipes? No, not in every assignment. But in some specific assignments (e.g., an appraisal performed for litigation over water contamination), you may need to as part of your scope of work.
Continue your education on examples of environmental hazards
Mold, contaminated drywall, asbestos, lead paint, and lead pipes are just a few examples of environmental hazards you might run into when appraising a property. To learn more about appraising challenging properties and construction materials, enroll in one of our Continuing Education (CE) courses:
- Residential Construction and the Appraiser
- Complex Properties: The Odd Side of Appraisal
- Appraisal of REO and Foreclosure Properties
Check out our Unlimited CE Membership for unlimited learning
Whether you want to learn more about environmental hazards, earn a certification, complete the 7-hour USPAP training, or simply fulfill your state requirements easily, our Unlimited CE Membership gives you unlimited access to all our continuing education courses, so you can save time, save money, and get the quality education you need to stay at the top of your game!
