Bad egg smell, burnt copper wire on the back of an outlet cover, air conditioner that keeps breaking up all those times we’ve had it fixed. These are types of warning signs that would make a homeowner literally go look for Chinese drywall solutions, and once we ended up being believers, even selling your home also can appear like a much larger challenge than what sent you stepping down this road.
And the truth is it depends: Yes, you CAN sell a house that contains Chinese drywall or other defective building products, and depending on how it’s structured, you DO NOT have to remediate before sale. This guide looks at what misbehaving drywall is, how to spot it, the disclosure requirements, and whether to sell as-is cash sale or fix everything before listing.
Nothing on this page is legal, tax or financial advice and is for general informational purposes only. However, because no homes or jurisdictions or situations are alike, we suggest contacting a licensed inspector (or real estate attorney or tax pro), depending on your needs) About your specific situation.
Chinese Dry Wall (Problem Drywall) Explained
When builders began importing Chinese drywall by the shipload after a domestic shortage during post-hurricans worker shortages the roughly 2004 to 2008 timeframe, it would have been easy enough to conclude that because every sheet of drywall printed with the Chinese flag was also spewing toxic levels of sulfur compounds, an apparent defect now called “problem drywall” in vague terms, that all this imported matter should be sent back home [2] along with lesser amounts from other sources.
The 2017 national exam of lead exposure was a multi-year collaborative effort led by the CPSC with assistance from the EPA, CDC and HUD. The CPSC has received over 2,000 reports of problematic drywall from residents in 44 states, Washington, D.C., American Samoa and Puerto Rico, with almost 90 percent of those reports coming only from just five states: Florida, Louisiana, Mississippi, Alabama and Virginia. The affected homes, mostly constructed or renovated from 2001 to 2009, were a cluster of properties most concentrated in the years of 2006 and 2007.
Signs Your House Might Have Contaminated Drywall
The window of identification for problem drywall set forth by the CPSC hints at a two-prong method, recommending that you first look for corrosion associated with problem drywall and then back it up with some supporting evidence. Here are a few common signs that people notice:
- Persistent odor of rotten eggs or sulfur, especially in small enclosed spaces
- Figure 3: A copper wire that was coated with a black or corroded layer (The best view of this corrosion comes from wires left behind by electrical outlets and switch controls.)
- Cooling coils can become rusty or scorched, leading to multiple AC repairs and malfunctions over the same duration
- Discoloration of metal components in the walls or fixtures such as copper piping
- Because Copper is a common material in most modern appliances or electronics, it makes these often breaking down at all much simpler.
The CPSC did WARN that not all homes with any of the symptoms listed do in fact contain problem drywall, as some other conditions can cause similar symptoms, so it recommends that a single symptom should be considered along with corroborating evidence, such as markings on the drywall itself indicating that it’s from China or testing showing high sulfur gas release.
Health Concerns Reported by Homeowners
Besides damage to property, homeowners across the United States with defective Chinese drywall have reported symptoms while living in homes containing the affected material such as chronic dry and itchy eyes and skin, experiencing labored breathing, persistent coughs that will not go away, headaches or sinus irritation. Importance: CPSC investigations conducted separately from the problems associated with problematic drywall did not confirm a causal relationship between defective drywall and the more serious sequelae in those separate cases studied, but reports of symptoms described above are well documented among thousands of complaints submitted to the agency.
And if you are currently in a home where health issues are going on because of earth, that is a doctors conversation not an article trying to diagnose.
Chinese Drywall Disclosure When Selling?
Similarly, most states will legally mandate the disclosure of any material defect that could impact a person’s desire to pursue purchasing a property (or which would affect the value of the home). With the voluminous documentation surrounding problem drywall, both as it relates to property damage and allegations that it creates health problems, it should definitely trigger disclosure laws in practically all cases designed to protect you if there is any basis to believe it exists.
From selling to a property owner or cash buyer. So, the distinction based on sale type is not that you do disclose or you don’t but rather what happens after you have disclosed: A traditional buyer or its lender will typically require that the issue be resolved before closing vs. a cash buyer purchasing as-is assuming the condition becomes part of their work-up in making an offer.
What Remediation Actually Involves
So, if you are to remediate (not sell is as-is) then it’s something big. As to guidance, federal guidance issued by the CPSC and HUD published in 2009 after years of testing recommends that all drywall identified as problem drywall be replaced along with copper electrical wiring, fire suppression sprinkler components, gas service piping and smoke alarms only in affected areas as these are the materials most likely to be attacked by hydrogen sulfide and other corrosive gases. This type of mitigation is a whole-house project as opposed to just patchwork, which typically requires licensed contractors for completion and can take weeks based on the amount of damage and size of home.
Selling As-Is vs. Remediating First
| Factor | Remediate, Then List Traditionally | Sell As-Is for Cash |
| Upfront repair costs | Significant, often whole-house scope | None required before selling |
| Disclosure required | Yes | Yes |
| Buyer pool | After remediating, traditional buyers and lenders | Cash buyers and investors |
| Lender involvement | Essential, though many lenders will not lend till remediated | None |
| Timeline | Standard listing timeline + remediation weeks | Days to a few weeks |
| Who manages the remediation project | You, before closing | The buyer, after closing |
The Process of Selling As-Is to a Cash Buyer
For years, Eagle has purchased homes in as-is condition including houses with suspected or obvious tainted building products. Here’s what that generally involves:
No remediation required before selling. No repairs to drywall, electrical (wiring) or anything they destroyed before the offer was made or at settlement.
At least you were expecting revelation, and that’s a little bit good. This creates an unjustified cushioned bid rather than bidding based on your profession so, if you performed some diagnostics even you can include contractor notes or if there’s a symptom you’ve seen.
A written, no-obligation cash offer. You find out the price the property would be able to sell at current condition prior to you putting any funds down.
No agent commissions. The average commission for a typical sale is 5-6%. This is a cost you essentially build into the deal when financing, but by doing a direct cash sale, you’re removing that cost.
And that is the way most every other hazardous-materials incident forges. Our guide on how to sell a house with asbestos, as well as our article selling a house with mold tackle very similar disclosure and as-is sale questions, and our guide on selling a water damaged home addresses how cash buyers evaluate property condition challenges. You can also look at our overall process for additional context on the how it works page.
Something to Know Since It’s for Taxation
The IRS casualty loss provision has the backs of those who have had to pay out-of-pocket for damage from corrosive drywall. The IRS will essentially not challenge that loss, as long it is calculated and reported in accordance with this guidance under a safe harbor set forth in IRS Publication 547. That is good practice to include if you are interested in visiting a taxation professional because the reimbursement and loss calculation can become technical.
Frequently Asked Questions
Can You Sell a House With Chinese Drywall?
Yes. If you sell it to a cash buyer, for example, who is getting the property as-is, then you’re under no obligation to remediate it beforehand. When selling to developers, you must disclose known material defects (including believed or real problem drywall).
Signs Your House Might Have Chinese Drywall
The distinct signs are an always present sulphur or rotten egg smell, blackened copper wiring and plumbing lines, multiple air conditioning units destruction. The CPSC recommends looking for independently confirmed evidence of more than one symptom, including bad-smelling Chinese markings on the wallboard or scientific tests finding excessive exhalation of sulfur gas because other problems could generate similar symptoms.
Am I Giving Up a Few Grand Because of My Toxic Drywall?
Generally, yes. The cash offer you are presenting is only representative of the buyer’s post-closing out-of-pocket costs associated with remediation. Now this is something that broadens up for other major repairs to be honest and you should not be a stranger to this as it save your out of pocket expense from remediation before the sale.
And You Must Remediate It Ahead of Time for a Traditional Home Sale.
In practice, usually yes. This severely restricts most of the realistic buyers for a traditional listing to cash investors until or unless the remediation is completed, as most lenders will not even lend on known problem drywall.
Ongoing Topic or Issue Problem Drywall in New Construction Homes?
No, not to the same extent. For example, new federal regulations limit the appropriate amounts of sulfur in drywall in U.S. sales and create standards for labeling gypsum board products. Homes that were built or remolded during the time frame where the so-called Chinese drywall problem occurred (between 2001 and 2009).
Are Drywall Repairs Tax Deductible?
Possibly. There is a safe harbor for waste drywall repair costs relating corrosive dry wall damage with IRS Publication 547. It is the subject of another article for the tax professional as all sorts of factors about your situation determine if and how you calculate the deduction.
The Bottom Line
As disappointing and frightening as it can be to locate Chinese dry wall or any other defective building product in your house, but it should not met months before you heal the injury a conclude moving on. You still own that house, you can sell it as well which is the ethically advisable choice and the best thing to do no matter what route is learning. However, an as-is cash sale relieves you of the burden of remediation and dealing with contractors to see a whole-house repair project through to completion.
If you are dealing with suspected or confirmed problem drywall, and you’d like to see what a cash offer would look like, contact our team. Isn’t it a problem to hire local companies to work for, which is because we’ve stopped buying houses with the purchase of liquidated properties from lead-painted paint, asbestos or other disasters that can contaminate houses. In the meantime, visit our sell my house page to get started.
