Josephine Godinez, PA
October 2009

Fallout from Chinese Drywall

October 17, 2009 by Josephine · Leave a Comment 

As if homeowners dealing with the dangers of toxic drywall didn’t have enough problems, the Associated Press recently reported that insurance companies are dropping or not renewing policies associated with properties believed to have been constructed with defective building materials.

According to the article, at least three insurers have already canceled policies after homeowners sought their help replacing the bad wallboard. Because mortgage companies require homeowners to insure their properties, they are then at risk of foreclosure, yet no law prevents the cancellations. “This is like the small wave that’s out on the horizon that’s going to continue to grow and grow until it becomes a tsunami,” said Florida attorney David Durkee, who represents hundreds of homeowners who are suing builders, suppliers and manufacturers over the drywall. “This is going to become critical mass very shortly.”

As a result of the health risks that its presence poses, detecting Chinese drywall has become an important initiative for current homeowners as well as prospective home buyers. For a growing number of people, detection of Chinese drywall in their home or place of business has come not as a result of proactive testing but rather as a result of the sudden onset of respiratory and related illnesses.

How is it that Chinese drywall might have made it into your home, you might ask. The simple answer is that the real estate boom of 2002 – 2006, and resultant shortage of building materials, led U.S. developers and builders to import drywall from China in order to meet demand for new homes, apartments and commercial structures.

Before this risk manifests itself in an illness, it is recommended that steps be taken to detect Chinese drywall in those homes or buildings suspected of having been constructed with these potentially hazardous building materials. While the presence of toxic Chinese drywall can be detected by various means available to a homeowner, a professional home inspector or general contractor will need to validate your findings in order to ensure that your interests are being protected.

Chinese Drywall Detection Tip #1: Does the air in your home smell like rotten eggs?

According to a recently concluded study by the Environmental Protection Agency (EPA), Chinese-made drywall contains high amounts of sulfur as well as concentrations of strontium and iron not typically found in drywall products produced in the United States. The tell-tale smell of rotten eggs is a good indicator that sulfur-laden Chinese drywall is present.

Chinese Drywall Detection Tip #2: Are your air conditioning coils corroded?

Repeated issues with the cooling capability of your air conditioning unit and/or the presence of black corrosion on the coils serve as good indicators that Chinese drywall is present. As copper coils associated with air conditioning units age naturally, they tend to take on a gradual patina whereas those exposed to sulfur emissions will turn charcoal or black over a short period of time. Other metallic surfaces such as plumbing shut-off valves and internal outlet wiring have been known to take on a similar black appearance when exposed to Chinese drywall.

Chinese Drywall Detection Tip #3: What markings are visible on the drywall?

While this step requires that samples be cut from installed drywall, doing so tends to be a determining factor if any questions remain regarding the presence of toxic Chinese drywall. Markings on the back or interior surfaces of Chinese-made drywall will state “China”, “Knauf Tianjin” or “Knauf”. If you are unable to remove samples large enough to expose markings, do-it-yourself Chinese drywall test kits are available to consumers. These test kits often consist of testing probes, chemical analysis packs and a set of instructions.

No Need to Panic

As is always the case, it is important that calm heads prevail. Just because a property was built during the period in question does not mean that a problem exists. In my experience representing many buyers and sellers during the boom and post-boom world here in South Florida, I have come across only one case in which Chinese drywall was an issue.

Awareness of the Chinese drywall dilemma is simply another item on your checklist as you prepare to purchase a home. It is no different than checking on the condition of the roof or quality of schools in the neighborhood. Given the importance of the investment in your home, it’s important to cover all of your bases. Should you have any questions, please feel free to contact me.

The Looming Tax Credit Deadline

October 13, 2009 by Josephine · Leave a Comment 

There is no question that the $8,000 first-time home buyers tax credit has had a positive impact on the real estate industry in general and South Florida, specifically. As noted in a previous post, sales are up 52% in the greater Miami metro area (August 2009 vs. August 2008).

Having said that, what impact is the looming November 30th deadline having on the market and psyche of buyers? Based upon my experience, it has certainly infused a greater sense of urgency - which can be both good and bad. Good in the sense that it is causing those who are indecisive by nature to get off the fence, but bad in that it is causing some to make knee-jerk or otherwise poorly informed decisions.

As always, it goes back to solid financial fundamentals and emotional control. Don’t settle for a home that is not right for you and don’t bid on properties if they are priced more than 5 - 7% above your pre-determined budget. Assuming a 30 - 40 day window to close on a sale considered regular or a fully approved short sale, this next week or so will be very competitive for those “better” properties.

If you are working with a detail-oriented Realtor, one strategy to consider is to place an offer at or near the asking price (even if you know that it is overpriced based upon a solid comparative analysis of recent home sales in the area) to lock down that dream property. The buyer’s interests will be protected by the professional appraisal conducted by the lender. If the appraisal comes in lower than the contractually agreed-upon price, the parties to the agreement will have to return to the table to come to terms on the revised price. Full disclosure is key here as the buyer must understand the strategy being employed.

I’ve been asked time and again about the potential for an extension to the tax credit. I wish that I could provide you with a definitive answer, but we’ll have to wait and see together. If I had to guess, my money is on the government allowing the current credit to expire and assessing the impact on sales in a post-stimulus world. If December and January sales are lower than is typically the case, pressure will be brought to bear and legislators will have to take action.

Josephine Godinez, PA