Should you buy a house used as a grow-op?
A house once used as a grow-op may seem temptingly cheap. But is it really a wise investment?
On a quiet Scarborough street, the small, nondescript home blended in easily with its neighbours. But at $354,900, the asking price was substantially lower than other surrounding properties.
One big reason: The home was a former marijuana grow op, according to listing documents by the seller, a trust company.
“Buying a grow op is for a very select market because there is a stigma attached to these properties,” said George Miller, the broker of record for the property on Richmond Park Boulevard.
Grow ops are big business for organized crime. A survey of homes in the Greater Toronto Area for the Starreveals that homes that were used for grow ops sell for an average of about 15 to 25 per cent less than similar homes, according to research by veteran property appraiser Barry Lebow.
“There’s no doubt. . . that homes that were former grow ops are difficult to sell and stigmatized,” said Lebow, a frequent court expert witness on stigmatized properties.
Based on a sampling of 25 homes listed on the Multiple Listing Service this year in the GTA, Lebow compared the properties to similar ones that sold in the area.
Average overall losses were in the 20 per cent range for properties that had been former grow ops.
“Some buyers are picking up formerly stigmatized properties because they are cheaper and it allows them to get into desirable neighbourhoods,” said Lebow.
But the appraiser cautions the hot market may be masking the fact that the same property will likely be more difficult to sell down the road if the market experiences a downturn.
“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,” said Lebow.
The issue of grow ops has caught the attention of politicians.
Ontario Progressive Conservative leader Tim Hudak announced over the summer that he would establish a registry of homes that have been formerly used as grow ops and meth labs.
“Meth labs and grow ops pose a serious danger to the health and safety of homebuyers and their families and they also threaten their pocketbook,” said Hudak. “Often these homes receive cosmetic renovations to disguise their former, criminal use before they are sold to an unsuspecting buyer.”
Elaine Kehoe, an agent who has listed and remediated dozens of grow-op properties over the last decade, said some properties need a total makeover — right down to the studs — because of mould and wiring issues.
Health hazards from grow ops include mould and mildew, due to the high humidity needed to grow the plants. Heavy chemicals used for plant growth can also cause respiratory problems and allergies. The wiring of the home may also have been dramatically altered to tap into hydro lines to power high wattage lights.
One property had work done that exceeded the $210,000 mortgage, said Kehoe.
“Some of the professionals will use everything but the front room. They’ll take out the washroom and use every square inch for the plants,” said Kehoe.
Buyers should request an environmental clearance certificate from an engineering inspection, signing off that the home has a “clean bill of health,” said Kehoe. Lab tests alone could cost anywhere from $5,000 to $6,000.
Some properties need so much work that they are better off being torn down and used for lot value, she said.
As for buying a grow op, Lebow says it’s buyer beware. A 20 per cent drop may not be enough to compensate for potential long-term loss down the road.
“You may get a deal now, but it might not be down the road.”
Spotting A Grow Op
Spotting A Grow Op
• The house does not appear “lived in.” Someone only visits for short periods of time.
• The house’s exterior isn’t cared for.
• People often back into the garage.
• The windows are covered.
• Bright light can be seen escaping from the windows.
• There’s a strong skunk-like odour.
• Garbage bags are taken out of the home and transported away.
• There may not be snow on the house in winter, unlike neighbouring homes.
Source: Toronto Police Services
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