Does a lower price equal better value to buy a former grow-op house?
On a quiet suburban street, a very ordinary-looking bungalow had been put up for sale. But with an asking price $310,900, it was far less expensive than surrounding real estate offerings.
Why? It was a former marijuana grow-op, according to listing documents by the seller, a trust company.A survey of houses in the Toronto area showed that former grow ops are sold for fifteen to twenty-five percent 15 to 25 per cent less than similar properties with an average loss of twenty percent.
Some people choose former grow-ops for less expensive price tags. But the hot market may be masking the fact that the same property will also be more difficult to sell down the road. Once a property has a negative factor which leads to stigma, every time it is listed for sale or lease that fact must be disclosed by the realtor.
Some of the growers will use everything but the front room. They’ll take out the washroom and use every square inch for the plants. One property had mold removal and reconstruction that exceeded the $210,000 mortgage, said Lebow.
The high humidity required to grow marijuana creates health hazards from mold. It is also common with grow-ops to radically change the building’s wiring to tap into power lines in order to use high wattage lighting.
Anyone wanting to buy a former grow-op should have an engineering inspection conducted to get an environmental clearance certificate that shows the house to be safe and free from dangers and contaminants. Unfortunately these inspections cost around $5,000 to $6,000 and many buildings need so much remediation that they should simply be torn down and sold for the lot’s value. .
As for buying a grow op, it’s buyer beware. A 20 per cent drop may not be enough to compensate for potential long-term loss down the road. What may seem like a deal now might not be down the road.
How to Recognize A Grow-Op
• There is an odd skunk-like smell around the house.
• Garbage bags are transported away from the house.
• Snow melts off the roof though it doesn’t on neighbouring houses.
• People drop by for very brief periods.
• Windows are blacked out or covered with heavy curtains.
• Strong grow lights can be seen where windows are not completely covered.
• Vehicles are seen backing into the garage.
• The house is poorly cared for, grass not cut, snow not cleared.
Source: Toronto Police Services