Chinese drywall homes for sale draw some buyers

Showing up on real estate agents' listings these days: homes with caustic, smelly Chinese drywall.

Also showing up: willing buyers.

Andres Hernandez and his wife fell in love with a new house in south Tampa, contaminated with tainted Chinese-made drywall. It made the house uninhabitable.

A rotten-egg stench filled the air, and the drywall emitted a sulfuric gas that corroded the air conditioning coils, light fixtures and appliances. Buyer after buyer said no, but the Hernandezes wanted it anyway.

The couple felt the $290,000 they paid was a good price for the 4,000 square-foot home. They paid contractors about $40,000 to replace all of the drywall and now think it's worth nearly $400,000.

"Everyone is so scared of this drywall," said Andres Hernandez, who lives in the home with two small children. "But once you remove it, it's good, it's gone. It's not a bacterial infection that spreads."

Throughout the Tampa Bay area, there are hundreds, possibly thousands, of homes like the one the Hernandez family bought. Increasingly, they're listed for sale. Some have already been gutted and reconstructed by builders. Others are listed "as is."

The homes for sale typically have unbelievable listing prices, some at a fraction of the cost of comparable homes in the neighborhood. They range from town homes in the suburbs to million-dollar, waterfront properties.

The federal government is still investigating possible health problems associated with the drywall. Homeowners have complained of breathing trouble, headaches and nose bleeds. The Consumer Product Safety Commission recently recommended that homes with the drywall be gutted and rebuilt.

So, who wants to buy a home no one can live in?

Real estate agents say buyers with cash to fix homes can get a bargain, however, they should understand the risk: buyers may underestimate the scope of the problem. Renters, also, face problems with unscrupulous investors who take on tenants without fixing the drywall.

Robert Fernandez, a real estate agent with Citimax Homes, is trying to sell a Chinese drywall home for a client in south Tampa. After five days on the market he said he received 40 phone calls and 25 e-mails for interested buyers. No serious offers, though.

The 5-bedroom, 2,708 square-foot home in the Ballast Point neighborhood is listed for $174,900. He has estimates that show it would take another $190,000 to fix the drywall problem. If the home didn't have the bad drywall, Fernandez estimates it would sell for about $350,000. At the height of the market in 2006, he said it would have been worth about $750,000.

"I get calls from people who can't believe they can afford this kind of house and wonder if they can just live with the drywall," Fernandez said. "I tell them this isn't the house for them."

The most disturbing calls, he said, are from investors who have no intention of replacing the drywall. And if they do, he said, some want to do it as cheaply as possible.

Even experts disagree about how to remedy the problem. Some say the home must be gutted down to the studs and every inch of drywall replaced. They say wiring, the air conditioner, appliances, cabinets and even flooring must be removed. Others say only the drywall needs to be replaced.

"If you're an investor, you're trying to maximize your profits, how do you fix the problem?" Fernandez said. "Do you change all the drywall or just the drywall in certain rooms? The chances of an investor getting it all out, in most cases, is slim to none."

That's a scary thought, said Danna Fischer, legislative director for the National Low Income Housing Coalition.

The housing crisis, she said, affects renters, too. They can get kicked out when their landlord ends up in foreclosure, and by the time a renter realizes the home has bad drywall, she said, the investor may have collected months of rent and deposits.

"I absolutely see the potential for these homes to be snapped up by investors and turned into rental properties," she said. "And they'll probably be rented to low-income tenants."

Fischer said she's not aware of any laws that would require landlords to notify tenants of the bad drywall. There have been no definitive answers on health affects from government agencies studying the drywall.

Tom Scaglione, a real estate agent with Future Home Realty Inc., said most brokers require sellers to sign a Chinese drywall disclosure form, but that the law doesn't require it. Even so, he said, renters wouldn't see that form.

Some agents disclose the drywall issue in the listing, but some don't. A quick search of a database of homes for sale showed 23 listings mentioning Chinese drywall in the Tampa Bay area. Scaglione said that sounds low.

"There's probably another million homes that will come on the market nationwide over the next year," he said. "Many will have this drywall."

Linda Reynolds, a real estate agent with Reynolds Realty of Manatee Inc., is experiencing another facet of the problem. Her Sun City Center client tried to sell his home cheaply and had no success. He's now paying to replace the drywall, but the home still receives little attention from buyers.

"We listed the house 'as is' and put a low price on it, and no one wanted it," Reynolds said. "We got inquiries, but they wanted the drywall fixed. Now the seller is fixing it, but we've had to raise the price. There has been no response."

Some buyers, she said, are just as afraid of the stigma of living in a home that had Chinese drywall as they are the drywall itself.

Hernandez, the buyer who repaired his south Tampa home, said he's well aware of the stigma, but thinks people are uneducated.

"I would never live in a home with the drywall," he said. "That's just not smart. But this problem is totally fixable."