Banks and insurers increasingly shy away from former grow ops, brokers say

While former grow ops may seem like a good deal to some buyers, experts caution that banks and insurers are increasingly shying away from these properties — even after all of the necessary remediation has been done.

"It's always been strict, but it was a lot looser four or five years ago," says Jeff Mark, co-founder of broker Spin Mortgage, adding that only credit unions and subprime lenders are willing to finance these homes, often at higher rates than those offered by the banks.

Running a grow-op in a residential home can cause extensive damage that may be pricey to remedy.

High levels of moisture can cause mold to grow in the walls. Pesticides and other chemicals can seep into carpets and walls and contaminate the air. Even the home's structural integrity and electrical wiring may be compromised.

Before a lender will agree to mortgage a former grow op, a battery of costly tests must be performed to ensure it is inhabitable.

Brokers say the process can be so arduous that many buyers throw in the towel, adding that in an increasing number of cases, even a single marijuana plant is enough to stigmatize a home.

 

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Prasad Ari

Prasad Ari

Sales Representative
CENTURY 21 People's Choice Realty Inc., Brokerage*
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